Confirming media speculation, Amer Sports announced this morning that it has received a non-binding preliminary indication of interest from a consortium comprising Anta Sports Products and an Asian private equity firm, FountainVest Partners, in view of acquiring its entire share capital for €40.00 a share in cash. That would be equivalent to a total consideration of around €4.6 billion.
Some investors apparently feel at this stage that the transaction may not go through in the end. After a brief suspension on the Helsinki Stock Exchange after the announcement, the Finnish-based sports group saw its share price jump today by more than 18 percent to €34.09 as compared to yesterday's close, going way above a former 52-week high of €32.80. The new share price values the company at €3.97 billion.
In contrast with Amer, Anta's stock price on the Hong Kong stock exchange was down slightly in early trading. With a stock market capitalization that is equivalent to around €10.8 billion, much higher than that of Amer, Anta would probably have no problems in finding money for the transaction. Bloomberg has worked out that Anta had $1.5 billion of cash and equivalents at the end of June.
The indication of interest from the consortium came after Anta reported a buoyant performance for the first half of this year (see our previous issue) with a sales jump of 44.1 percent to 10.55 billion yuan renmimbi (€1.32bn-$1.52bn). The group's profit attributable to shareholders soared by 34.0 percent to RMB 1.94 billion (€247m-$280m).
In just a few years' time, Anta has turned into the largest Chinese sports apparel and footwear brand, and it works the Chinese market with several others. It acquired brand rights for Fila in China nine years ago, and more recently sealed joint ventures to sell the Descente and Kolon brands in the same market. But Anta managers have made it clear in the last years that they were eager to complement their business through substantial international acquisitions. Several sources suggested that Anta previously sniffed at Puma, although this could not be substantiated.
The Amer group's winter sports equipment and apparel business could be particularly relevant for Anta, a partner of the Chinese Olympic Committee, which is eager to capitalize on the upcoming Winter Olympics to be held in Beijing in 2022. Salomon and Atomic are among the Amer Sports brands that stand to get plenty of exposure at these Olympics. Others could gain from increased Chinese interest in winter sports, such as Arc'teryx and Peak Performance. Wilson is an asset in the basketball category, which has been targeted by Anta as well, and Amer's acquisition could add complementary businesses in the racquet sports and fitness markets.
Amer pointed out that it has yet engaged yet in any negotiations with the consortium and that it has not made any decision in respect of its indication of interest. It noted that the prospective investors' project is subject to a number of conditions and that completion of the tender offer would be subject to further conditions.
Besides the endorsement by Amer's board of directors and by shareholders holding at least 90 percent of the shares, one of the conditions would be the availability of financing from identified sources. Another one would be the approval of the deal by the board of directors of Anta.
Created in 2007 and based in Hong Kong, Fountainvest is described as one of the largest private equity funds dedicated to China. It is led by one of its founders, Frank K. Tang, who started his investment banking career in the New York office of Goldman Sachs, a company where he worked for 11 years.
The expression of interest made by Anta and Fountainvest was made public only a few days after last Thursday's scheduled meeting between the management Amer Sports and financial analysts (see the following story).
