Samsonite Confirms the Deal to Buy Tumi

Samsonite International agreed to buy its rival luggage maker, Tumi Holdings, for about $1.8 billion. This deal is the Samsonite’s biggest acquisition since its initial public offering in 2011. The acquisition gives Samsonite, the world’s largest luggage vendors, access to the premium luggage segment and offers the distribution channels in both Asia and Europe to Tumi. In addition, Tumi is hoping to gain its bargaining power over suppliers and landlords for retail outlets under Samsonite’s presence.

Tumi produces products ranging from rolling luggage to tablet cases and brief cases, which are distributed to more than 100 of its own stores and high-end department stores as well as other retailers. Tumi’s luggage products are usually priced at $500 and above, higher than Samsonite’s own brands priced at $100-$300.

Samsonite expects Tumi’s strong brand and growth in business and luggage products to influence the design for Samsonite and American Tourister products. Also, the acquisition is anticipated to give Samsonite much more leverage for negotiation in sourcing, speaking to shopping malls, and marketing. After the completion of purchase, Samsonite will have a combined 14% share of the global luggage market.

The market reacted positively to the announcement of the deal. Tumi’s shares in New York increase up to 30% at the time of closing and Samsonite’s shares ended up closing at 1.3% growth. Samsonite stated it will maintain the same dividend policies after the acquisition and Tumi will be delisted from the stock market. In addition, it has been noted that the transaction will likely close in the second half of the year, and will be fully funded through term loans from several international banks such as Bank of Tokyo-Mitsubishi UFJ, HSBC, Morgan Stanley, National Association, and SunTrust Bank.

Wall Street Journal

Wall Street Journal

Bloomberg

Bloomberg

 

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