Anta’s Amer Takeover Has a Sporting Chance
(Bloomberg Opinion) -- For Chinese companies, buying overseas rivals has been an uphill struggle of late. But one sneaker-maker's multi-billion dollar bid for a Finnish manufacturer of winter sports gear is likely to be more of a downhill slalom.
That's because Anta Sports Products Ltd.’s planned purchase of Finland's Amer Sports Oyj, valued at 4.7 billion euros ($5.3 billion), ticks plenty of boxes and should leave a crucial one – foreign opposition – unchecked.
Here are some reasons why a deal for Amer, which owns the Wilson tennis rackets used by Serena Williams as well as the Atomic and Salomon ski equipment brands, is a go.
First, there’s Amer’s product range.
More and more Chinese deals have been triggering national security concerns of late. It’s been seven months since China Three Gorges Corp. announced a 9.1 billion euro ($10.3 billion) bid for Portuguese utility EDP-Energias de Portugal SA. The state-owned Chinese utility has been sounding out European buyers for EDP’s U.S. assets to ease its passage, Reuters reported in June citing sources familiar with the matter. The deal, which EDP says is still in the works, would be 2018’s largest takeover by a mainland firm.
Even less controversial transactions are getting caught in the dragnet. The Committee on Foreign Investments in the U.S., Washington’s panel scrutinizing overseas acquisitions, blocked Japan’s Lixil Group Corp. in October from selling a money-losing Italian construction unit to China’s Shenzhen Grandland Group Co., leading the acquisition to be scrapped. It’s hard to see the national security implications of a maker of high-tech toilets selling off a provider of glass building facades.
Still, Amer’s business of tennis balls, ski boots, and even Louisville Slugger baseball bats is on a whole other level. It’s unlikely to raise any red flags from U.S. or European regulators, even these days.
Secondly, Anta's bid has plenty of financial backing.
It’s not just increased political and regulatory scrutiny of proposed Chinese takeovers in Europe and the U.S. that’s hurt mainland buying overseas since its peak in 2016. Beijing too has clamped down on deals by private conglomerates like HNA Group Co., which it saw as accelerating capital outflows and weighing on the yuan as well as driving debt levels up.
On that score, Anta has nothing to worry about. China’s biggest maker of sporting goods had 8.9 billion yuan of net cash at the end of June, is making progress on tapping Asian and European banks for 4.22 billion euros ($4.8 billion) of loans, and has plenty of partners to help it.
The bid for Amer with Asian buyout firm FountainVest Partners Co. has been joined by Chinese Internet giant Tencent Holdings Ltd., and also by Chip Wilson, the Canadian billionaire who founded yoga-wear maker Lululemon Athletica Inc., people familiar with the matter told Manuel Baigorri, Cathy Chan and Carol Zhong of Bloomberg News. Wilson is in talks to take around a 20 percent stake as part of a consortium led by Anta, the people said.
Anta's purchase will also have the happy coincidence of meeting Beijing's aims of having mainland firms own globally renowned brands while giving the Chinese sportswear company an increased overseas presence. That’s especially valuable as the threat of increased tariffs by the U.S. on Chinese exports is nowhere near over.
Anta is in the process of moving up the chain from being a plain-vanilla sneaker-maker to being a more premium and expensive sportswear retailer, an ambition in which its tie-ups with Japanese sportswear maker Descente Ltd. and the textile division of Itochu Corp. have helped. Owning Amer would be the icing on the cake: The firm could cash in on a potential boom in winter sports as Japan prepares to host the 2022 Winter Olympics.
Getting into bed with Anta, whose more than 11,000 stores are overwhelmingly in China, will also be no bad thing for Lululemon as it tries to cash in on a surge in its revenues from the country.
This isn't a deal that's going to spend too much time in the regulator's court.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.
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