Semir Apparel Failed To Buy GXG Due To Problems.

Zhejiang Semir Clothes & Accessories Limited by Share Ltd yesterday afternoon temporary suspension, Semir clothing subsequently announced that the company is currently planning foreign investment matters, according to the relevant provisions of the China Securities Regulatory Commission and the Shenzhen stock exchange, Semir suspended today, but Semir has not yet disclosed the resumption time.

Some analysts said that Semir's "currently investing in foreign investment matters" may involve clothing Mergers and acquisitions of enterprises. "Semir issued a news report last year that it will buy GXG, but in January this year, the takeover was unexpectedly terminated. The suspension may involve the acquisition of another garment company."

According to NetEase financial reports, in June 19, 2013, Semir The company's board of directors passed the motion on the framework agreement of the company to buy shares of Ningbo zhe Mu sang Holding Co., Ltd., and issued a 71% stake to zhe Zai Shang management Yang Herong, Yu Yong, Zhu Zhaoguo, Tu Guangjun and Mao Chunhua. The transaction volume is expected to be between 1 billion 980 million yuan and 2 billion 260 million yuan.

This handwriting is the largest transaction to date in the acquisition of Chinese traditional clothing brands. According to Semir's disclosure, Semir will complete the layout of different consumer level markets by acquiring zhe Mu Shang, a local mid end fashion Brand Company. Some analysts have pointed out to NetEase finance that if GXG's three series of brands enter Semir dress system formally, Semir's middle end men's and children's wear product lines will be expanded in a large scale. Statistics show that the size of zhe Mu still grew from less than 3 million of its initial sales in 2007 to terminal sales of nearly three billion yuan in 2012. It owns the men's wear brand GXG, the urban youth brand gxg.jeans and the children's wear brand gxg.kids launched in August last year. By the end of 2012, the total number of GXG stores and gxg.jeans stores reached around 1200.

The high premium is also one of the reasons why the deal has attracted much attention. According to NetEase financial understanding, as of the end of 2012, zhe Mu Shang book net assets of 270 million yuan, so the acquisition premium of more than 10 times. For the acquisition of high premium and the placement of the founding team of the acquirer, Semir announced the corresponding plan. In the commitment, zhe Mu still has a net profit of not less than 265 million yuan in 2013, but net profit in 2014 and 2015 is not less than 20% over the previous year. If the performance is lower than the above commitments, the transferor will make corresponding compensation for the company.

Some analysts have previously told NetEase finance that behind Semir's acquisition is Semir's pressure on product mix and performance. Some analysts pointed out that Semir is mainly located in the low-end market, and its price competitors are mainly Mester. But both Semir and Mester are highly commercial. They are able to rapidly expand the market by opening up stores and investing heavily in the market when the market is not mature enough. "In today's consumer spending becomes rational, Semir is obviously facing the challenge of product aging, and the single product is the biggest short board." Data show that Semir apparel revenue in 2012 reached 7 billion 63 million yuan, down 8.43% over the same period last year.

However, in January of this year, a major change in the acquisition took place. Semir clothing announced that the agreement between Semir and the transferor was not able to sign the agreement on transfer of shares in December 31, 2013, because the company and the transferor failed to reach agreement on the specific terms of the transfer agreement. In accordance with the framework agreement, Semir's purchase of Ningbo zhe Mu sang Holdings Limited's equity framework agreement was lifted and terminated.

For the failure of the acquisition, Semir did not make much explanation in the announcement, and there were different external speculations. However, some analysts pointed out to NetEase finance that Semir's own capital problem is the main reason why the transaction can not be reached.