Li Rucheng, chairman of Youngor, believes that the textile and garment industry in China is considered as a low-end industry, because most of the high-end markets at home and abroad are occupied by internationally renowned brands and second-tier brands. Domestic enterprises mainly export OEM products, and the proportion of self-owned brand products is very low. The rise of RMB exchange rate and the reduction of export tax rebate greatly reduced the processing profit. If Youngor wants to move from a manufacturing enterprise to the high end of the industrial chain and become an internationally renowned clothing enterprise, it must cultivate its own brand and control the marketing channels in order to obtain the added value of the upstream of the industrial chain.
By 2006, Youngor has completed the construction of the whole industrial chain of textile and garment industry-the cotton fields and spinning enterprises in the upstream can guarantee the supply of raw materials, the yarn-dyed and woolen enterprises in their own can ensure the selection of raw materials designed by garment companies, and the marketing channels in the downstream can ensure the smooth sales. However, this industrial chain only ensures Youngor's better product quality and lower manufacturing cost, and cannot enhance the brand's gold content. To internationalize the brand, Li Rucheng and his management team deeply feel the lack of talents and international marketing channels, especially the cultural gap, which is difficult to bridge in a short time. From the short-term goal, controlling international marketing channels can ensure Youngor's huge capacity release and brand product sales.
Smart, a subsidiary of Hejing Taifu, is a world-renowned clothing production, sales and brand agency enterprise. The core company is Xinma Clothing Co., Ltd. registered in Hong Kong. Xinma is an American asset related to Smart, mainly including Smart's original inventory and accounts receivable in the United States. Together, they are called Singapore-Malaysia Group. Youngor is interested in international brands owned by Singapore and Malaysia, especially the marketing channels in overseas markets. Therefore, Youngor's management has a highly unified opinion on the intention to acquire Singapore Malaysia: Singapore Malaysia's strengths are just Youngor's shortcomings, and the acquisition is highly complementary.
Subprime loan "opportunity"
"Youngor chose a good time for this acquisition, that is, after the subprime mortgage crisis broke out in the United States," said Li Jie, a textile and garment researcher at Everbright Securities.
In 2004, Youngor and Smart jointly established Yaxin Shirt Co., Ltd., each holding 50% of the shares. The joint venture company mainly produces shirts by OEM, and the products are exported to the American market through Hong Kong. At the same time, Singapore and Malaysia also participated in Youngor Rizhong Textile Printing and Dyeing Co., Ltd. ... In 2006, 7% of Youngor's sales revenue of products and raw materials came from Singapore-Malaysia Group, which has a deep understanding of its business capabilities.
In 2005, KWD Company, which mainly focuses on women's clothing business, hopes to sell men's clothing business with Xinma Group as the core. The management team of Singapore and Malaysia especially hopes that Youngor Group will become the acquirer. On the one hand, the early cooperation has enhanced understanding and is more conducive to the integration after the merger; On the other hand, China's unique labor resources, Youngor's production base and raw material supply capacity provide a guarantee for the better development of Singapore-Malaysia Group in the future. Li Rucheng, chairman of Youngor, took the initiative to participate in the bidding, and the proposed purchase price was basically based on the net assets: 65.438 USD+600 million USD.
However, the third-party institution-UBS (USB) assessed the price of Singapore-Malaysia Group at $320 million. Youngor refused to accept this price, and the sale of the new horse was temporarily put on hold.
Due to the intensification of competition in the high-end clothing market in the United States, the profit of Singapore-Malaysia Group, which can't get more investment from Hefu Global, fell sharply in 2006. In 2007, the US macro-economy showed signs of recession due to the subprime mortgage crisis, and consumption was sluggish. Hejing Taifu Company once again showed its willingness to sell the men's wear department, which also gave Youngor an excellent opportunity to acquire it at a low price.
Li Rucheng hired CITIC Securities (600030 Stock Exchange, Stock Bar) as financial consultant, Smithford Law Firm as legal consultant, Shanghai Dongju Group as evaluation consultant and KPMG as audit consultant. At the same time, in view of the fact that Singapore-Malaysia Group's business and factories are located in China, the United States, Sri Lanka, Malaysia and the Philippines, local legal consultants are specially hired to conduct comprehensive and detailed affairs and investigations. On August 24, the two sides signed a confidentiality agreement and the acquisition negotiations officially began.
The whole negotiation didn't go well. Around the purchase price, the two sides began tit-for-tat hard negotiations. Zhang, executive vice president of Youngor Group, who participated in the negotiation, recalled that the negotiation often lasted until after midnight, in order to communicate repeatedly for a certain detail difference including culture, law and way of thinking.
Li Rucheng finally touched the hearts of senior management and shareholders of Hejing Taifu Company. He promised that Youngor's acquisition of Hejing Taifu men's wear business was an investment in Hejing Taifu Company. This cooperation will open a huge space for the long-term cooperation between the two sides, and Singapore and Malaysia will also achieve considerable development after entering Youngor. He Jingtai Fu finally agreed to sell all the original departments with Youngor's final bid of 65.438+0.2 billion yuan.
Integration expectation
"The core business of Xinma Group includes 65,438+04 production bases in Sri Lanka, the Philippines, Guangdong, Jilin and Shenzhen. It is the OEM business of more than 20 brands such as POLO and CalvinKlein, and owns five authorized brands such as Nautica and PerryEllis. After the merger, Youngor's production capacity will reach 80 million pieces, making it the largest men's wear enterprise in the world. Li Rucheng, Chairman of Youngor Group, said: "Youngor pays more attention to the design team of Singapore-Malaysia Group in Hong Kong, the sales channels reaching hundreds of department stores in the United States and the strong logistics system. "
Xinma Group is a world-famous ODM business, and it is a kind of franchise production, which can realize completely independent design and independent sales. The team of designers in Singapore and Malaysia are familiar with the design culture and style of world-class brands and have the idea of integrating eastern and western cultures. If they can integrate into Youngor's design team, it will greatly shorten the time for Youngor to explore design independently and shorten the time gap with world brands. "
TRUDIROACH, vice president of design from Singapore-Malaysia Group, believes that Youngor's becoming the parent company of Singapore-Malaysia Group will provide a broader stage for the design team of Singapore-Malaysia Group, and Youngor's independent raw material system and finely managed manufacturing capacity will make the design team's concept better implemented.
"The biggest difficulty in corporate mergers and acquisitions is not in mergers and acquisitions, but in the post-merger integration stage." Xu, an executive of Youngor Group, said that Singapore-Malaysia Group is one of the top five clothing giants in the United States. More importantly, the team is located in Hongkong, and has some knowledge of China culture. We are also familiar with Youngor's corporate culture through cooperation, which makes us full of confidence in the future integration. Xu believes that the joining of Singapore-Malaysia designer team will gradually change the status quo of first-class quality and moderate price of Youngor clothing in China, and enhance the gold content of domestic brands; The channels and logistics in Singapore and Malaysia provide a realistic way for Youngor's own brand products to enter the European and American markets.
Li Jie believes that this acquisition is beneficial to Youngor's long-term development. As the largest clothing enterprise in China, the company can directly enter the overseas market through acquisition, which will help it expand its influence in the international market. "Any acquisition is risky, but Youngor's acquisition timing is good, the price is relatively fair, the acquisition target is its long-term partner, and both sides know each other better," Li Jie said. "All these have laid a good foundation for future integration." (Source: China Economic Net)