According to Fashion Business News, Lycra Group, an American fiber manufacturer owned by China’s Shandong Ruyi Group, officially changed hands a few days ago. Shandong Ruyi’s creditors obtained all the shares of Lycra Group after the group defaulted on a US$400 million loan.
The new owners include China Everbright Ltd., Tor Investment Management and South Korean private equity firm Lindeman Partners and its affiliate Lindeman Asia.
In 2019, Shandong Ruyi purchased a 53.4% stake in the apparel and advanced fabrics business of the American company INVISTA from the American conglomerate Koch Industries for US$2.6 billion, including the world-renowned LYCRA® brand . Shandong Ruyi borrowed about $1 billion for the deal.
After the transaction was completed, the new company was named the American Lycra Group, and Shandong Ruyi became the controlling shareholder of the Lycra Group and operated as an independent subsidiary.
This acquisition was a milestone three years ago. It was the only approved merger and acquisition of a high-tech company in the Sino-US trade war in 2018, attracting great attention from all walks of life.
Before Lycra changed hands, Shandong Ruyi had rejected the sale of Lycra proposed by Lycra’s creditors and planned to list Lycra. Lycra’s financial situation made creditors worried about the possibility of default and hired restructuring firm Alvarez and Marsel to find potential buyers, but Shandong Ruyi believed that an IPO would better increase Lycra’s value.
Lycra’s new shareholders said in a statement that they are committed to completely extricating the company from the financial difficulties of its former shareholders. Leica CEO Julien Born said the new ownership structure provides the necessary support from experienced professionals who are aligned with the company’s long-term vision.
Different from Shandong Ruyi’s acquisition of other apparel brands such as SMCP, the acquisition of Lycra Group is the one that is closest to its own textile business among many acquisitions and is conducive to consolidating the group’s core capabilities.
However, on the one hand, Shandong Ruyi lacks the operational capabilities of fashion brands. On the other hand, after carrying out multiple acquisitions from 2015 to 2018, Shandong Ruyi Group fell into a dilemma of being heavily in debt. After the epidemic, it faced serious financial difficulties.
According to the 2021 annual report released by Ruyi Group, the group’s revenue fell by 12% to 690 million yuan, and the net profit attributable to shareholders of the listed company was only 990,000 yuan, a year-on-year decrease of 80%.
Under the heavy pressure of debt, not only has Shandong Ruyi’s vision of building a Chinese version of LVMH become a castle in the air, but the group’s main business is also in turmoil.
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