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Private equity firm to buy Samsonite

CVC Capital Partners of London agrees to pay $1.11 billion for the luggage maker.

July 06, 2007|From the Associated Press

BOSTON — Venerable luggage maker Samsonite Corp. said Thursday that it had agreed to be acquired by London-based private equity company CVC Capital Partners for $1.11 billion.

The price of $1.49 a share is a 12% premium over the company's closing price Tuesday on the Over-the-Counter Bulletin Board.

Samsonite had about 742.1 million shares outstanding as of June 8, according to a filing with the Securities and Exchange Commission.

Including the assumption of debt, the deal is worth about $1.7 billion.

The company's board approved the sale, and groups that control about 85% of Samsonite stock also have approved the deal, which is expected to close during the fourth quarter.

Frank Fine, executive director of the American Luggage Dealers Assn., said the sale could improve Samsonite's reputation with retailers, which he said was blemished because the company hadn't participated in the industry's Travel Goods Show for several years.

"They're probably the only luggage retailer that has not participated in that show," Fine said. "For the retailer community, that's been a strong negative signal to their commitment to the industry.... [The] stock has languished in recent years, so hopefully this new ownership will invigorate the management."

Samsonite was founded in 1910 in Denver and was family-owned until the 1970s. Since then, it has been taken over by various investors and is currently owned by private equity investors Ares Management, Bain Capital and the Ontario Teachers' Pension Plan.

The company survived four straight years of losses totaling $285.3 million in the late 1990s and early 2000s.

It was close to a major refinancing deal in 2001, but the arrangement fell through after the Sept. 11, 2001, terrorist attacks because lenders feared a major decline in the travel industry.

Samsonite struggled over the next two years -- at one point being delisted from the Nasdaq Stock Market -- until shareholders in July 2003 approved a recapitalization that pulled the company back from the brink of bankruptcy.

In 2004, Samsonite brought in Marcello Bottoli, the former chief executive of Louis Vuitton, to revamp its image as a luxury brand.

The company plans to move its headquarters from London to Mansfield, Mass., by the end of the year.

CVC Capital Partners has 18 offices throughout Europe, Asia and the United States, and has more than $15 billion invested in equity capital.

The group's managing partners, Hardy McLain and Luigi Lanari, said in a statement that they expected to expand the company in China and India.

Calls to Samsonite were not immediately returned.

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