With the share price now at €1.31, up from the previous level of about 50 cents, the stock market value of BasicNet has more than doubled to some €78 million. The feat is the result of an announcement that the Italian company is netting US$35 million from the sale of the perpetual rights to its Kappa and Robe di Kappa brands to its Chinese licensee, with an option of first refusal in case of their re-sale to another party.
The two brands generated sales of about €17 million last year for the Chinese licensee, Diamond King International, but they are expected to grow to much higher levels in view of the Olympic Games in Beijing. Diamond King will continue to pay a reduced royalty to BasicNet for the development of the collection. Under the new deal, it will also enjoy a right of “first offer” if BasicNet wants to sell the trademarks for other parts of Asia, with the exception of India and Japan.
The $35 million payment will be made in three instalments by Dec. 31. BasicNet, which suffered a loss of €7.7 million last year, plans to use the cash for the development of Superga and other corporate goals, including an accelerated expansion of its retailing program. The company has a global license for the Superga brand, which had sales of €18 million last year, but it may use its new financial resources to exercise and option to buy the brand. It already owns another brand, K.Way.
Diamond King is an affiliate of DongXiang Sports Development Co. of Beijing, with which BasicNet began to work in 2002. Last Fall, Li-Ning sold its 75 percent stake in DongXiang to the company’s management, led by Chen Yi Hong, and to his financial partners.
