Footwear firm's move seen as significant for globalizing operations, moving up the ladder
C.banner International Holdings Ltd, the Chinese footwear company, is poised to buy the 255-year-old British toy retailer Hamleys for around 100 million pounds ($154.1 million), as part of efforts to enhance its global branding strategy. [Special coverage]
C.banner confirmed in a statement to the Hong Kong stock exchange on Thursday that discussions to buy Hamleys, from French retailer Groupe Ludendo, were at an "advanced stage".
It said it was "in the process of negotiating and finalizing the definitive documentation with a view to entering into a legally binding agreement in the near future".
It insisted, however, it had not entered into any definitive agreement with the seller.
A specialist women's footwear retailer selling under brands including MIO and Sundance, C.banner is also believed to be working on a partnership to distribute toys and children's products via the British department store House of Fraser, which was bought by Chinese conglomerate the Sanpower Group last year.
Yuan Yafei, Sanpower's chairman, is thought to have family links to C.banner, which is led by chairman Chen Yixi.
An iconic name in British retail, Hamleys is also firmly on the London tourist trail, despite its being controlled by a series of foreign owners in recent years.
It was sold to Ludendo in 2012 for around 60 million pounds.
Chen said on Thursday: "A strong brand is an outstanding resource. The acquisition of a world-renowned brand could greatly enhance the firm's competitive advantages."
C.banner was listed in Hong Kong in September 2011. Its shares ended on Friday at HK$3.16 (46.5 cents), up 3.27 percent.
Its most recent figures show first-half revenues of 1.41 billion yuan ($221.5 million), a 14.1 percent increase, despite a slowdown in China's footwear industry. The company owned 1,754 stores and had 544 franchised outlets, as of June.
According to Clover Wei, senior associate at London-based market intelligence firm Euromonitor International, the Chinese toys and games market is currently worth around 60.1 billion yuan but Euromonitor expects that to rise to 86.4 billion yuan by 2017, after enjoying around 9 percent annual growth previously.
Jason Yu, general manager of market researcher Kantar Worldpanel, said China's footwear market is extremely competitive, especially as consumers switch from offline to online sales channels.
He said Chinese shoe retailers, including C.banner, typically operate in the lower end of the market where they are increasingly being squeezed by rising manufacturing costs and fierce price competition.
"As Chinese consumers place a lot of emphasis on brands with strong reputations and international heritage, this acquisition of Hamleys could help C.banner compete more effectively in the premium end of the retail market, and avoid competing on price," said Yu.
