Chapter 40 Chapter 11 Extraordinary 2007

Where is the wind blowing?Mergers and acquisitions! At the end of the hustle and bustle of 2007, Li Ning received an expensive "New Year gift": On November 15, 2007, Li Ning Company issued an announcement announcing that it would spend 305 million yuan to acquire table tennis equipment manufacturer Shanghai Double Happiness Group Co., Ltd. 57.5% of the company's shares. "Double Happiness" is the oldest and most well-known table tennis brand in China, and now it is a brand under another well-known brand "Li Ning". This is not an accidental M&A move.As early as 2004, in the listing plan of Li Ning Company, it has clearly stated that it will invest 40 million Hong Kong dollars for the acquisition and management of other international brands in the Chinese market. strategic acquisitions.

From the initial "asset-light" model, Li Ning has been learning and imitating Nike until it grows into the number one local company that directly competes with Nike in the Chinese market.If you look at what Nike has done, you will know why Li Ning is full of yearning for mergers and acquisitions and is so urgent. In 1988, Nike acquired Cole Haan, which produces casual and gentleman leather shoes. In 1995, it merged with Bauer, a manufacturer of ice hockey shoes. In 2002, it acquired Hurley International, a manufacturer of skateboards and apparel. In 2004, it acquired Converse, a manufacturer of sports shoes.These acquisitions have brought huge returns to Nike, and Nike has become the company with the widest range of products and the longest product line among multinational sporting goods companies.Nike publicly pointed out that "acquisitions are the best way for companies to suppress rivals."Now, Cole Haan, which Nike bought for US$80 million, has realized sales of about US$300 million, becoming one of the driving forces for Nike's future growth. After the acquisition of Converse, sales have changed from a decline in sales to a growth of 25%.

Nike's behavior shows that the scale and specialization of the company can be promoted through acquisitions. In order to implement a multi-brand strategy like Nike, Li Ning has made many efforts.The most famous and dramatic one was in September 2005, when Li Ning himself walked into the gate of Umbro, an old British sportswear company, the British "Times" excitedly threw out an explosive news: " Li Ning from China will acquire Umbro from the UK." Accordingly, foreign media described "Li Ning" as "Lenovo and BenQ in China's clothing industry" and paid attention to it.Based on the stock price at that time, the market value of Umbro at that time was about 190 million pounds (about 2.6 billion yuan), while the market value of Li Ning Company was about 4 billion Hong Kong dollars at that time, and it held about 700 million yuan in cash.This would obviously be a bold acquisition.Not long after, Li Ning Company issued a statement to clarify the acquisition, saying that "at present, there is no acquisition plan between Li Ning Company and Umbro Company", but the outside world immediately speculated: "These remarks are just to let the market relax their vigilance and let them Create a false sense of security, and at the very least, don't put too much pressure on Li Ning before things are done." However, the final facts proved that "Li Ning" failed to reach a cooperation with Umbro as expected.As time went by, the deal eventually fell through.

At the end of 2005, Li Ning finally took a new step in its multi-brand strategy: it established a joint venture with AIGLE, a French outdoor sporting goods brand, with each party holding 50% of the shares. The second multi-brand project of Li Ning Company was not implemented until April 2007: the launch of its first sub-brand "Xindong", which is a brand with an average price of around 200 yuan and aimed at the low-end market, mainly sells The channel is the supermarket store, so as to broaden the channel coverage and consumer coverage of Li Ning products. These brand extensions are just scratching the surface.Li Ning Company has never stopped looking for objects that can be acquired, and actively negotiating with potential objects.In 2007, the task became even more urgent.In this year, Anta and China Dongxiang have been listed successively, and the acquisition plan in their prospectus is impressive.Market resources are limited. If Li Ning Company, which was the first to gain a capital advantage in the stock market, is caught up by a latecomer, it will be a big blow to Li Ning Company. In 2007, Zhang Zhiyong accelerated plans and negotiations to find targets for mergers and acquisitions.

Finally, near the end of 2007, Li Ning Company acquired Double Happiness in one fell swoop, and its acquisition plan was considered to have made substantial progress. This made Zhang Zhiyong smile when he faced the media who went to interview him. It seems that Double Happiness is a good acquisition target.As early as 1961, Double Happiness table tennis balls were approved by the International Table Tennis Federation as balls for international competitions. In 2000, the International Table Tennis Federation passed the initiative to reform the table tennis ball and announced that the Double Happiness standard was adopted as the international standard. As a result, Double Happiness established its leading position in the world table tennis field.Now, Double Happiness is the industry leader in the field of table tennis, with the largest domestic market share, a partner of the ITTF, and a high reputation internationally.In addition to table tennis, Double Happiness has also made great achievements in the other two pillar sports, badminton and weightlifting.In addition, Double Happiness also holds the "Olympic card" that "Li Ning" urgently needs: Double Happiness has become the Olympic designated equipment supplier for the three events of table tennis, badminton and weightlifting in the 2008 Beijing Olympic Games.Winning Double Happiness is equivalent to winning these three rights at the same time.