Samsonite International S.A. announced on Friday it would acquire Tumi Holdings for a per share price of $26.75 in a transaction of all cash that values Tumi at just over $1.8 billion, as the largest luggage group in the world expands into the luxury market.
Samsonite, which is listed in Hong Kong, announced that it would be financing its acquisition with loans from banks and the transaction should be closed during the second six months of this year subject to shareholder and regulatory approvals.
Investors are applauding this deal, sending shares of Samsonite up by over HK$25.1, the highest price since last October.
Shares trimmed their gains, but remained up over 2.3% in midday trading, outpacing a gain of 0.6% in the Hang Seng Index.
One analyst from BNP Paribas said the match was near perfect in a number of aspects such as regional mix and retail channels, category mix as well as price points.
The price of the deal represents a premium of 38% to Tumi’s weighted average prices for the five days through March 2 of $19.34. Tumi is based in New Jersey.
Tumi posted net sales of $548 during 2015, which was an increase of 4% from the same period in 2014. North America sales represented over 68% of the overall sales. Net income for Tumi was up by 8.6% in 2015 to just over $63 million.
Ramesh Tainwala the CEO at Samsonite said the business was planning to expand the presence of Tumi in Europe and Asia, while strengthening business across North America.
Samsonite, apart from the flagship brand, sells Hartmann suitcases that are high-end and Lipault travel bags, American Toursiter luggage as well as Gregory and High Sierra backpacks.
Samsonite has gone on a buying spree, acquiring Rolling Luggas in February of 2015, which has stores in different airports, and Italian retailer of travel luggage Chic Accents last October.
Samsonite wants to expand its reach to offset the slow growth at this time in China, which represents only 10% of its sales globally. The luggage company announced previously that it expected its sales growth in China to halve from the second six months of last year.