Aarthi Sivaraman and Michael Flaherty/Reuters
New York: Luggage maker Samsonite Corp., a company on the verge of bankruptcy only four years ago, has agreed to be bought by private equity firm CVC Capital Partners for $1.1 billion in cash.
Samsonite, whose stock was delisted from the Nasdaq SmallCap market in 2001, will receive $1.49 per over-the-counter share. Including debt, the value of the deal is $1.7 billion.
A well-known brand across the United States and Europe, Samsonite manufactures and distributes luggage and travel-related products under its namesake brand and others such as American Tourister, Lacoste and Timberland.
The company’s stock plunged from more than $44 a share in 1997 to around $5 in 2001. The stock took a further hit when global travel was sharply reduced after the 9/11 attacks.
Samsonite was majority-controlled by Apollo Management and another investment group until 2002.
The following year, Ares Management, Bain Capital and the private investment branch of Ontario Teachers’ Pension Plan came to the rescue. The firms recapitalized the company by infusing $106 million in cash to help pay down debt.
The private equity investors own about 85% of Samsonite’s common stock.
“When we found the company in 2003, it was a couple of weeks away from bankruptcy,” Melissa Bethell, a London-based principal at Bain Capital, told Reuters in an interview. “Our recap was very much driven by the intent to de-lever the company and give it the flexibility to grow its business.”
After the new investors took over, the company focused more on upscale products, taking that approach first to Europe and Asia and later to the US, Bethell said.
In March 2004, Marcello Bottoli, a veteran of luxury-brand bagmaker Louis Vuitton, became the CEO.
The CVC deal is expected to close in the fourth quarter of 2007, and is subject to regulatory checks in the United States and Europe, Samsonite said.
Samsonite’s OTC shares closed up 8.3%, or 11 cents, at $1.44.
CVC said the company will look in particular to India and China, which present growth opportunities.
Merrill Lynch was Samsonite’s financial adviser, and UBS and Lehman Brothers advised CVC Capital Partners.