Hong Kong billionaire Henry Cheng’s family aims to take control of apparel retailer Giordano
- The deal for Giordano could be worth as much as US$326 million
- Clear Prosper Global, the Cheng family’s offshore unit, has offered to buy 75.4 per cent of the company it does not already own
The family’s offshore unit, Clear Prosper Global, offered to buy 75.4 per cent of Giordano International it does not already own for HK$1.88 per share, according to an exchange filing late on Thursday. The offer includes HK$34 million worth of outstanding stock options.
The price represents an 18 per cent premium over Giordano’s last traded price of HK$1.59 on June 7, and 32 per cent above the group’s net asset value at the end of 2021.
Giordano’s shares closed 17 per cent higher of HK$1.86, its largest jump since August 2011, after trading resumed on Friday. The gains, which pushed the stock to a two-year high, added HK$426 million to the company’s market value. The stock was suspended on June 8, pending a merger and takeover announcement.
Cheng had a net worth of US$26.4 billion as of late February, according to Forbes, ranking him as the third-richest tycoon in the city, after Li Ka-shing and Lee Shau-kee.
“The apparel industry is not doing very well, not just in Hong Kong or China,” said Walter Woo, consumer analyst at CMB International, adding that Giordano was not an isolated case. “As long as the company can survive this period, they will probably recover in another cycle. Buying brands like this and at this kind of price is attractive; they may be loss- making for one or two years, but going forward, their cash flow will be strong.”
Giordano’s first-quarter sales grew 5.5 per cent to HK$917 million, largely driven by improvements in Southeast Asia and the Gulf Cooperation Council markets as social distancing measures and travel restrictions eased, according to its exchange filing. However, tighter Covid measures in mainland China and Taiwan dented sales.
As for Hong Kong and Macau, Giordano said in April it would continue to close loss-making stores, as rental expenses remained high in the current operating environment.
Established in 1981, Giordano operates about 2,100 shops predominantly in Asia, including Greater China, Southeast Asia, South Korea, Australia and India, according to its website. It was founded by media mogul Jimmy Lai Chee-ying, who left the board in 1994 and eventually sold his shares.
