China textile firm to buy stake in Japan's Renown
Source: ctei Date: 2010-05-26
Chinese textile group Shandong Ruyi said on Monday that it will buy a 41 percent stake in Japanese apparel maker Renown Inc (3606.T), the latest in a series of investments by Chinese firms in Japan.
The 4 billion yen ($44.4 million) share purchase will make Shandong Ruyi the largest shareholder in Renown, a loss-making collection of men's and women's clothing brands that traces its history back 108 years.
The deal underscores the growing economic power of China, which is on a path to overtake Japan as the world's second-largest economy. It also points to a move by Japanese firms to secure a means to tap the promising Chinese market.
Shandong Ruyi President Qiu Yafu sought to allay any concerns that the Chinese firm was looking to control Renown, which needed to bolster its finances after posting its fourth straight annual loss in the past business year amid slumping sales.
"Renown is an independent Japanese company. There will be no hierarchical relationship between the two firms," he told a news conference in Tokyo through a translator. "We will help Renown to cultivate the Chinese market."
For Shandong, the alliance will give it access to Renown's brands, which include D'Urban and Henry Cotton's, and a route into the Japanese market.
Chinese companies have made a series of relatively small acquisitions in Japan in the past few years. The Renown deal is the fifth-biggest acquisition or investment involving a Japanese target since 2005, according to Thomson Reuters data.
Last year China's Suning Appliance Co purchased a 27 percent stake in electronics retailer Laox, and earlier this year Chinese car and battery maker BYD Co bought a factory from Japanese metal die manufacturer Ogihara Corp.
Ruyi will buy Renown's shares at 120 yen each, a 15 percent discount to Friday's close.
Shares of Renown shot up 35.5 percent to 191 yen on Monday after weekend media reports of the deal.
Investment fund Neoline Holdings, currently the top shareholder with a 24.9 percent stake, has been pressuring management to bolster returns.
Renown President Minoru Kitabatake said he believed Neoline will support the deal when it is put to a vote at a shareholders' meeting on July 29.
"They (Neoline) wanted us to seek a capital boost and an international strategic parter. Thus, I believe they will welcome our decision," Kitabatake said at the news conference.
