Qumei offers £470m to buy Ekornes
Chinese furniture manufacturer and retailer Qumei has offered £471.2m in cash to buy upholstery manufacturer Ekornes.
The board of the Stressless owner has recommended the takeover to shareholders, and 25.65% to shareholders have accepted. The offer is a 25% premium to Ekornes’s share price before the offer was announced.
Qumei has 850 furniture stores in China and plans to open 500 more in the next five years alongside 1,500-2,000 concessions. Last year it had sales of £2.46bn. Qumei plans to raise £293m through selling shares to help fund the takeover.
‘This agreement opens new growth opportunities for Ekornes and our renowned brands such as Stressless and IMG in China and in existing markets. We will benefit from Qumei's insight into Chinese consumers' design and product preferences and gain accelerated access to the Chinese market,’ sais Olav Holst-Dyrnes, Ekornes ceo.
‘Qumei´s sophisticated digital marketing approach, complimentary product range and sourcing capabilities should make us a better and stronger partner for all our retailers. Better customer understanding, improved concepts and enriched distribution channels should create accelerated sales of our Stressless, IMG and Svane brands. All in all, we believe the agreement with Qumei will constitute an opportunity for more sales in China and elsewhere, and in turn result in increased production at our current production plants,’ he added.
Ekornes will remain headquartered in Sykkylven, Norway and its manufacturing sites in Norway, the USA, Thailand and Vietnam will also continue.
‘We have been following Ekornes for many years, and we are impressed by Ekornes' strong brand and advanced production. We look forward to introducing Ekornes' brands to the rapidly growing Chinese furniture market. The acquisition of the company is in line with our global strategy and the first crucial step in Qumei's globalisation efforts,’ said Ruihai Zhao, Qumei chairman and general manager.
‘We put great emphasis on protecting the value of the Ekornes brands and we intend for Ekornes to remain an independent business, which will continue to be run out of Sykkylven. We do not believe in a model where the manufacturing process of international brands is moved to China. Qumei will maintain and invest in Ekornes' current production facilities in Norway and internationally and we will work closely with Ekornes to further develop its business, through sharing of Qumei's advanced Internet marketing technology. We are committed to continue and increase investment in research and development through the existing centre in Sykkylven and elsewhere, to drive further product development related to the Ekornes brands,’ he added.
‘After the first approach from Qumei more than a year ago, the board and management have spent significant time and efforts to assess this strategic opportunity and have engaged in a thorough process to assess the opportunities that Qumei may provide for Ekornes,’ said Nora Larssen, Ekornes chair.
‘We have met with Qumei several times and visited the company in China. We have been impressed by Qumei's ability to develop successful products and marketing concepts and we see great potential for Ekornes to continue its success under this new ownership. The two companies are complimentary in terms of market position, competence, and the industrial logic is evident. Both companies are filled with passion for furniture and quality products.’
Zhao is expected to succeed Larssen as Ekornes chair if the takeover goes ahead and intends to spend time in Norway following the transaction, working closely with Ekornes' management, employees and union representatives.
‘We acknowledge that the employees have played a key role in Ekornes' success, and we plan to maintain the stability and continuity of the corporate culture and the employee unions. We will maintain the employee seats on the board, and we will also be pleased to invite Stian Ekornes and Nora Larssen as well as other current board members to continue as board members. We are looking forward to working with company management and directors to ensure continued success in existing markets, based on Ekornes' highly automated production facilities and skilled workforce in Norway. Similarly, we expect the quality products of IMG produced at industry leading cost-efficient operations in Thailand and Vietnam, will also have a great potential in the Chinese market,’ added Zhao.