Amer Sports has issued a statement that its board of directors is unanimously recommending that its shareholders should accept the tender offer proposed by China's largest sporting goods company, Anta Sports Products, and other investors, after analyzing alternative opportunities.
The tender offer for all the shares of the Helsinki-based group is now expected to be made on or around Dec. 20 at the previously proposed price of €40 per share by the investors through a Finnish company formed for the purpose, called Mascot Bidco Oy owned by Mascot JVCo, which is incorporated in the Cayman Islands, like Anta itself.
The tender period will run for about ten weeks, with a possibility for extension, and the acquisition is expected to be completed during the second quarter of 2019 at the latest. The offer is conditional on regulatory approvals and on 90 percent of the shares being tendered. The investors are entitled to redeem any remaining shares beyond this limit.
If the tender offer goes through, Anta will indirectly own 57.95 percent of Amer. Chip Wilson, the founder of Lululemon Athletica, will have a stake of 20.65 percent through an investment vehicle called Anamered Investments. FV Mascot JV, an investment vehicle managed by FountainVest Partners of Hong Kong, will hold the remaining 21.40 percent of Amer's shares. Tencent Holdings, the Chinese high-tech internet company, will own 5.63 percent of FV Mascot JV's shares, with the balance coming from funds controlled or advised by FountainVest.
Advised by Goldman Sachs International and White & Case, Amer said it was satisfied that the price being offered is fair and that the investors should be able to finance the takeover. They are offering to acquire all the 116,517,285 issued shares of Amer Sports, including those held in treasury, representing a total purchase price of €4.66 billion, subject to certain adjustments.
The offer price of €40 represents a premium of about 39 percent as compared to the closing price of Amer's shares on Nasdaq Helsinki on Sept. 10, the last day before the Finnish group confirmed that it had received a preliminary indication of interest from Anta and FountainVest. The offer is also 43 percent higher than the average trading price on the exchange in the three months prior to Sept. 10, and 63 percent higher than the average over the previous 12 months.
Amer's share price has gradually risen to a level of around €38, particularly after notices given by Anta and Amer confirming their agreement tender on Dec. 7. Anta's share price has more or less evolved in the same direction, closing at around 37 Hong Kong dollars (€4.1-$4.7).
Nevertheless, only shareholders representing 7.91 percent of Amer's equity have irrevocably undertaken to accept Anta's bid so far, while another small shareholder indicated that it viewed the planned tender offer positively. Still, the board feels that the offer price is high enough to persuade the others to follow suit. It has agreed not to solicit a competing offer.
Amer's board expressed its belief that the group will benefit from the investors' stated intention to invest significant time, resources and efforts to help accelerate its ongoing strategic initiatives and new ones, including the expansion of Amer's businesses in the Chinese market. The new owners will invest in product development and human resources to accelerate the group's growth and to improve Amer's competitive positioning in the global market. Amer will also have access to Anta's distribution network in China and its R&D, manufacturing and sourcing capabilities in the country.
The investors have invited Heikki Takala to remain as president and chief executive of Amer, along with key executives. Amer would continue as an independent company based in Helsinki, but with a different board of directors.
Anta has pointed out that the acquisition will further enhance its ability to expand in China and abroad as a world leading sporting goods company. On the other hand, sources indicate that Anta plans to explore foreign markets for its own brand only at a later stage. The focus will be initially on the development of Amer's brands in the Chinese market, where high-end foreign brands with a heritage are strongly in demand. The 2022 Winter Olympics in Beijing should offer major opportunities for some of them.
Technically, an extraordinary general meeting is still due to be convened and held by Anta to approve the acquisition and its terms, including an escrow arrangement. However, Anta International Group Holdings, which owns about 61.45 percent of Anta's voting rights, already has irrevocably committed itself to vote in favor of the transaction. Further information will be provided to Anta's shareholders in advance of the extraordinary meeting on or before Jan. 28.
In case of disapproval by Anta's shareholders or any other problems, Amer Sports is being protected by a break-up fee of up to €275 million. For this purpose, the investors have already deposited $216.9 million as part of an escrow arrangement.
Anta and the other investors have agreed to contribute a total equity of €2,663 million to finance the acquisition, in proportion to their shareholdings. Anta itself would invest €1,543 million and Anamered (Chip Wilson) €550 million, for example.
The balance would come from two five-year term loans of €1.3 billion and €900 million, bearing an annual interest rate of 2.0 percent, and other credit facilities, which would also help to cover the repayment of Amer's existing debt of €950 million.
Founded in 1950 as an importer of tobacco products, Amer currently owns important brands such as Salomon, Arc'teryx, Peak Performance, Atomic, Suunto, Wilson, Louisville Slugger and Precor. It has put up Mavic for sale. Founded in 1991, Anta operates almost exclusively in China through the Anta, Fila, Descente, Sprandi, Kingkow and Kolon Sports brands.