Samsonite books a test flight out of Hong Kong

Samsonite SA

22/03/2024 12:00

(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
    By Robyn Mak
       HONG KONG, March 22 (Reuters Breakingviews) - Samsonite
 1910.HK  is testing the waters outside Hong Kong. The $6
billion luggage maker on Friday said it plans to pursue a dual
listing in addition to the Asian financial hub where its shares
have long suffered from low liquidity. A resulting valuation
uplift might be enough to convince potential suitors that a
buyout could make sense.
     Private equity firms have long eyed the
Luxembourg-domiciled company. Most recently, U.S. firms
including KKR  KKR.N  and Carlyle  CG.O  have shown preliminary
interest, Bloomberg reported earlier this month. Its global
business and strong post-pandemic financial performance make a
compelling case that its stock would be better appreciated
elsewhere. Before news that the company was weighing options
surfaced this year, Samsonite shares averaged less than $300
million in monthly turnover during 2022 and 2023, LSEG data show
- roughly a tenth of that for sporting goods retailer Li Ning
 2331.HK , also listed in Hong Kong, and VF Corporation  VFC.N ,
owner of Vans and EastPak, which trades in New York.
    The problem for CEO Kyle Gendreau is that an offer may be a
long time coming. High global interest rates have pushed up
funding costs for leveraged buyouts, diminishing the appeal for
multi-billion-dollar deals around the world. At Samsonite's
current market value, a bid would surpass Hong Kong's largest
take-private even before a premium. Moreover, unlike other
possible targets like skincare group L'Occitane International
 0973.HK , the luggage maker has no major shareholder that
suitors can team up with.
    Pursuing a secondary listing is one route to prove Samsonite
can command a higher valuation elsewhere. Buyout speculation has
pushed its stock up nearly a fifth this year, muddying the case
that the company is undervalued in Hong Kong. Its shares
currently fetch over 12 times forecast earnings for the next 12
months, per LSEG, slightly above New York-listed consumer brands
like Calvin Klein parent PVH  PVH.N  and Tapestry  TPR.N , but
below where Samsonite shares were valued at the start of 2022.
Sizing up investor interest outside of Hong Kong looks better
than just waiting around for a ticket out. 
    Follow @mak_robyn on X
    
    CONTEXT NEWS
    Hong Kong-traded luggage maker Samsonite International said
on March 22 that it is planning to pursue a dual listing to
increase liquidity and reach more investors in other markets. 
    The company did not specify which stock exchanges will be
considered and says the "pursuit of a dual listing is at an
early stage".
    Global buyout firms Carlyle and KKR have shown preliminary
interest in a potential buyout of Samsonite, Bloomberg reported
on March 7, citing unnamed sources. Other private equity firms
including Bain Capital and CVC Capital Partners are also making
early assessments on a potential bid, the report added.
    Samsonite's Hong Kong shares were down 7% to HK$28.40 during
late morning trading on March 22.
    

 (Editing by Antony Currie and Katrina Hamlin)
 ((For previous columns by the author, Reuters customers can
click on  MAK/   
robyn.mak@thomsonreuters.com; Reuters Messaging:
robyn.mak.thomsonreuters.com@reuters.net))