Li Ka-shing dresses up empire with French perfume deal


  • Business
  • Sunday, 16 Jan 2005

By JAMEY KEATEN

PARIS: Hong Kong tycoon Li Ka-shing has agreed to buy ailing retailer Marionnaud Parfumeries SA, injecting Parisian cachet into his Hutchison Whampoa Ltd empire by acquiring one of the leading perfume and cosmetics vendors in Europe. 

The top French perfume retailer accepted a 534mil euro (US$706mil) takeover offer from Hutchison's A.S. Watson retail unit, which expressed ambitions to build the industry leader by expanding in Europe and taking the brand to Asia. 

“It's a happy marriage for us'' Marionnaud founder Marcel Frydman, whose family controls about a third of its voting rights, said on Friday. He said the goal was “lasting and profitable growth'' and insisted job cuts were not planned. 

“We're going to need everybody – and possibly hire new staff,” he said. 

A.S. Watson, part of Li's vast Hutchison conglomerate, has a history of more than 175 years as a vendor in Asia and operates more than 4,300 health and beauty stores in European and Asian markets. 

Hutchison is the flagship company of Li, one of Asia's richest business executives whose holdings range from telecommunications and shipping to oil and gas production and real estate. 

Marionnaud, founded by Frydman in 1984, features mid-range boutiques designed to appeal to a wide public. The chain led an aggressive buyout spree in the 1990s, and today its shops dot many street corners in Paris and other French cities. 

The French company has more than 1,200 stores in 15 countries, including Morocco and Israel. About two-thirds of revenue – totalling 1.1bil euro (US$1.44bil) in 2003 – came from its 565 French stores. 

But Marionnaud has run into financial troubles recently. 

Last month, the company announced a 93mil euro (US$123mil) charge due to accounting errors in December, triggering a plunge in its share price and an investigation by France’s market watchdog, the AMF. 

Marionnaud shares were trading at 17.48 euro (US$23.13) just before they were suspended Tuesday, about 20% below their price before the charge was announced. 

Hutchison is offering 21.80 euro (US$28.54) per Marionnaud share and 69.74 euro (US$92.22) per convertible bond, and hopes to buy out minority shareholders and delist the retailer. 

A.S. Watson will also take on Marionnaud debt, but declined to indicate its value. As of last June, the French group had 550mil euro (US$720mil) in debt. 

Ian Wade, the chief executive of A.S. Watson, said his company decided to offer a premium to ensure that the proposal was “the first and only bid.” 

“Some people think it’s too much,” he said at a news conference alongside Frydman, adding that he had hoped to prevent any opposition from minority shareholders. – AP  

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