Samsonite books a test flight out of Hong Kong

Samsonite 1910 is testing the waters outside Hong Kong. The $6 billion luggage maker on Friday said it plans to pursue a dual listing in addition to the Asian financial hub where its shares have long suffered from low liquidity. A resulting valuation uplift might be enough to convince potential suitors that a buyout could make sense.

Private equity firms have long eyed the Luxembourg-domiciled company. Most recently, U.S. firms including KKR KKR and Carlyle CG have shown preliminary interest, Bloomberg reported earlier this month. Its global business and strong post-pandemic financial performance make a compelling case that its stock would be better appreciated elsewhere. Before news that the company was weighing options surfaced this year, Samsonite shares averaged less than $300 million in monthly turnover during 2022 and 2023, LSEG data show - roughly a tenth of that for sporting goods retailer Li Ning 2331, also listed in Hong Kong, and VF Corporation VFC, owner of Vans and EastPak, which trades in New York.

The problem for CEO Kyle Gendreau is that an offer may be a long time coming. High global interest rates have pushed up funding costs for leveraged buyouts, diminishing the appeal for multi-billion-dollar deals around the world. At Samsonite's current market value, a bid would surpass Hong Kong's largest take-private even before a premium. Moreover, unlike other possible targets like skincare group L'Occitane International 973, the luggage maker has no major shareholder that suitors can team up with.

Pursuing a secondary listing is one route to prove Samsonite can command a higher valuation elsewhere. Buyout speculation has pushed its stock up nearly a fifth this year, muddying the case that the company is undervalued in Hong Kong. Its shares currently fetch over 12 times forecast earnings for the next 12 months, per LSEG, slightly above New York-listed consumer brands like Calvin Klein parent PVH PVH and Tapestry TPR, but below where Samsonite shares were valued at the start of 2022. Sizing up investor interest outside of Hong Kong looks better than just waiting around for a ticket out.

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CONTEXT NEWS

Hong Kong-traded luggage maker Samsonite International said on March 22 that it is planning to pursue a dual listing to increase liquidity and reach more investors in other markets.

The company did not specify which stock exchanges will be considered and says the "pursuit of a dual listing is at an early stage".

Global buyout firms Carlyle and KKR have shown preliminary interest in a potential buyout of Samsonite, Bloomberg reported on March 7, citing unnamed sources. Other private equity firms including Bain Capital and CVC Capital Partners are also making early assessments on a potential bid, the report added.

Samsonite's Hong Kong shares were down 7% to HK$28.40 during late morning trading on March 22.