On November 26, Beijing time, Bloomberg quoted sources as saying that Anta Sports is considering selling fitness equipment brand Precor after offers from potential buyers. The price may be around US$500 million (approximately RMB 3.5 billion yuan).
Less than half a year after it officially completed the largest acquisition in China’s sporting goods history, Anta Sports (02020.HK) seems to be ready to make drastic changes to this asset.
On November 26, Beijing time, Bloomberg quoted sources as saying that Anta Sports was considering selling fitness equipment brand Precor after offers from potential buyers. The price may be around US$500 million.
In fact, this is not the first time Anta has sold assets this month. On November 12, Anta announced that it would sell 5.2517% of Amer Sports’ equity for HK$1.198 billion. Among them, Chaohong’s executive directors Ding Shizhong, Lai Shixian, Wu Yonghua, and Zheng Jie are also executive directors of Anta. The four will use a total of 71.2 million euros of their own funds to acquire 2.67% of Amer Sports.
In this regard, the industry generally believes that Anta spent a huge sum of money to acquire Amer Sports, which has brought considerable pressure to Anta. This transaction can make Anta’s balance sheet more “pretty” to a certain extent. Anta also stated in the announcement that this transaction can optimize the group’s balance sheet.
The seemingly eye-catching mid-term report data is actually surrounded by crises.
In June last year, Anta was short-sold by the institution GMTResearch Limited, and at the end of May this year, it was also short-sold by the institution “Killer Whale” BlueOrca Capital. Muddy Waters claimed that Anta Sports’ financial indicators were falsified, and even published five short-selling reports in a row, claiming that Anta controlled dealers privately, transferred costs, and transferred the actual controlled enterprises to the network it controlled to cash out, and at the same time forged the number of FILA stores and financial data.
Who will take action?
Fitness vertical media GymSquare said that Shuhua Sports, a local Chinese fitness equipment company currently undergoing an IPO, is also one of the potential buyers.
This sports company, which also started in Jinjiang, Fujian, also has a close relationship with Anta. Times Finance reviewed its prospectus and found that according to the revenue data of Shuhua Sports in 2018, the company The second largest business – exhibition rack business revenue was 389 million yuan, accounting for 33.35% of the main business revenue. As the first and third largest customers in this business, Anta and Xtep generated revenue of 226 million yuan for Shuhua, accounting for approximately 58% of the exhibition rack operating revenue and nearly 20% of the total revenue.
Bloomberg pointed out that although Anta is keen to build and expand most of the brands acquired from Amer, fitness equipment is not a core asset of its growth strategy. A person familiar with the matter said that the sale process for Precor could begin as early as next year, and that the deliberations are still in the early stages and it is uncertain whether an agreement will eventually be reached.
Ma Gang believes that the sale of Precor also means that Anta has begun to integrate brand assets and overall planning business. “The fitness field is too segmented, and the integration cost with Anta’s existing business is high, and it is difficult to reuse existing resources.” In Ma Gang’s view, the integration cost is high, so selling is the best choice. For Anta, It is not necessary to get involved in every segment, nor may there be a chance to be among the top. </p
