Equity firm to buy Mansfield's Samsonite in $1.7b deal
Samsonite Corp. of Mansfield, the world's top luggage maker, said yesterday it has been sold to private equity firm CVC Capital Partners Ltd. for $1.1 billion.
CVC will purchase all the shares of Samsonite for $1.49 per share and assume all of its debt, putting the cost of the deal at $1.7 billion.
"We believe that this transaction delivers excellent value to all our shareholders," said Marcello Bottoli, the chief executive of Samsonite, in CVC's press release. "I am excited to continue our successful journey to create the world's leading travel lifestyle brand together with CVC Capital Partners."
The deal comes as the company showed signs of emerging from a period of turmoil. Samsonite was founded in Denver under the name of Shwayder Trunk Manufacturing in 1910 and currently employs about 5,000 people. Known for its suitcases, and business cases, Samsonite almost went bankrupt in 2003 because of increasing competition, accusations of stock price inflation from shareholders which resulted in a $24 million settlement , and a dramatic decline in demand for travel gear after the terrorist attacks of Sept. 11, 2001.
Since being rescued in July 2003 by selling $106 million in shares to a group of investors that included Bain Capital LLC , a Boston private equity firm, Samsonite has used the money raised to pay down some interest on the debt that had built as the company changed hands several times since the '70s. Samsonite also relocated its headquarters and 90 employees from Denver to Mansfield in 2006 as part of an attempt to consolidate its main offices; the company had moved its Warren, R.I., operations to Mansfield in 2005 along with 120 employees.
Melissa Bethell, a principal of Bain Capital, said the money provided by the investment group that also included Ares Management LLC and an arm of the Ontario Teachers' Pension Plan , gave Samsonite enough breathing room to repurpose the brand.
"What we found in 2003 was a great brand, but a brand that had suffered from underinvestment," Bethell said. "A lot of the strategy was to reinvest back into the product design and consumer marketing," said Bethell. Bain controls 25 percent of Samsonite.
The company hired Botto li, a former chief executive of Louis Vuitton, in 2004 and has transitioned from a manufacturer into a firm that designs, markets, and distributes its products. It has placed more emphasis on its higher-end product line such as Samsonite Black Label, enlisting well-known designers such as Marc Newsom and Alexander McQueen.
Samsonite's net sales have grown from $752.4 million in fiscal year 2003 to $1.07 billion at the end of fiscal year 2007, although it was $501.9 million in debt at the end of fiscal 2007, as opposed to $371.3 million at the end of fiscal year 2003.
Bain, Ares, and the pension plan, which controlled 85 percent of Samsonite's shares at the time of the sale, had been exploring the possibility of listing the company on the United Kingdom's London exchange but received several unsolicited offers from private equity firms including CVC. The investment group saw better value in selling to CVC than taking Samsonite public.
Dick Millard , spokesman for Samsonite, said the company's current operations will not change much in the immediate future despite the change in ownership.
"The management team" has done a "fantastic job turning the company around," he said. "But taking it to the next stage of developments required a change in ownership."
CVC said in its press release it expects Samsonite to continue to become more oriented toward the luxury market and increase market share in Asia should everything go according to plan, "making it highly suitable for an initial public offering at some other date."
Christine Chen , analyst for Needham & Co. LLC, said Samsonite has no "pure play competitors" in the luggage market that are publicly traded. She said the accessories market has been booming worldwide in recent years but that most of the growth has come from handbags as opposed to luggage, which she said is not considered part of the traditional accessories category. While Samsonite has produced some handbags, Chen said such products have not yet been its focus.
"If they do enhance the brand and position themselves as high fashion and high quality, perhaps they can branch out," she said.
Se Young Lee can be reached at vlee@globe.com. 
