SMSEY Samsonite International SA (PK)

According to Reuters, The Royal Bank of Scotland Group plc (RBS) and CVC Capital Partners – a private equity company – announced the divestiture of their joint stake of $528 million in luggage manufacturer and retailer Samsonite International S.A. (SMSEY).

Royal Bank of Scotland along with CVC Capital sold roughly 212.4 billion shares for HK$19.28 ($2.48) each. Approximately 65% of the shares were sold by CVC Capital and the remaining by Royal Bank of Scotland. The total transaction amounted to around HK$4.1 billion ($0.5 billion). The Goldman Sachs Group, Inc. (GS) acted as the underwriter for the sale.

Earlier, in 2011, CVC Capital and Royal Bank of Scotland together raised roughly $821 million and helped Samsonite to get listed in the Hong Kong Stock Exchange with a $1.25 billion initial public offering (IPO).

In the current sluggish market, marred by new regulations and further compounded by the Euro zone crisis, many banks like Royal Bank of Scotland have resorted to downsizing non-core assets in order to reduce expenditures.

We believe the stake sale by Royal Bank of Scotland is a part of it restructuring process. Notably, concurrent with the third quarter 2012 earnings release, management indicated that the company will continue with the strong progress on restructuring. Management aims to complete most of the restructuring actions from its 2009 strategic plan in 2013 and 2014.

Going forward, we expect diversified business model and sound financial position to keep contributing to its overall growth in the future. However, we are concerned about the increasing competition, volatility in the global economy and the effects of the deepening Euro zone crisis along with the recent economic turmoil in Cyprus.

Among other foreign banks, Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) retains a Zack Rank #1 (Strong Buy).
 

 
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