Chinese Fosun bids on German fashion chain Tom Tailor

BERLIN (Reuters) – Chinese conglomerate Fosun International on Tuesday announced a takeover bid for troubled German apparel retailer Tom Tailor, reinforcing its presence in the fashion sector in Europe.

Shares of Tom Tailor jumped 14% to 2.46 euros, after the company announced that Fosun was increasing its stake to 35.35% by buying new shares worth 2.26 euros each. This will bring Fosun's stake above the 30% threshold that triggers a mandatory purchase offer under German law.

The capital increase will raise 8.6 million euros ($ 9.7 million), and an offer price of 2.26 euros per share would give Tom Tailor a total value 96 million euros.

Fosun, which owns the French leisure company Club Med, has grown into the retail sector in Europe at a time when Chinese consumers are boosting spending growth for luxury goods. Last year, she took control of Lanvin, the oldest couture brand in France, and the luxury lingerie and clothing brand in Austria, Wolford. She also holds a stake in the Italian high-end menswear brand Caruso.

The Hamburg company Tom Tailor, founded in 1962, operates in the mid-range segment of the apparel market, but faces difficult conditions.

Its shares have lost more than 80% of their value since a record of 12.9 euros last January.

Last month, Gerry Weber, another German retailer specializing in women's fashion, filed for bankruptcy after unsuccessful negotiations with financial partners.

Tom Tailor Chief Executive Heiko Schaefer said the capital increase, which was due to take place on February 22, was a vote of confidence in the restructuring plans of the firm's troubled subsidiary, Bonita, which sells women's fashion.

In December, Tom Tailor announced that he would intensify his efforts to restructure and modernize Bonita and reduced the value of the brand from 120 to 130 million euros.

"We consider the fact that Fosun acquires all the new shares as a sign of confidence in the path we have taken," said Schaefer.

Fosun has gradually increased its stake in Tom Tailor since its first acquisition in 2014. In 2015, Fosun also bought the German private bank Hauck & Aufhaeuser Privatbankiers for 210 million euros.

Chinese investors are facing a brutal reaction in Germany in recent years, fearing that state-backed companies will have too much access to key technologies from Europe's largest economy following acquisitions, including the 39, 2016 purchase of the robotics manufacturer Kuka by the Chinese Midea and the surprise purchase of nearly 10 percent in Daimler last year.

In December, Germany agreed on new rules aimed at lowering the threshold of filtering, or even blocking purchases of holdings in German companies by non-Europeans, in order to counter unwanted takeovers by Chinese investors in strategic areas.