Strategy

Samsonite Targets Luxury With Tumi Purchase

The $1.8 billion deal “will meaningfully expand our presence in the highly attractive premium segment," Samsonite's CEO says.
Matthew HellerMarch 4, 2016

Samsonite International has bagged rival Tumi Holdings in a $1.8 billion deal that gives it a foothold in the ultra-luxury end of the luggage market.

Tumi’s suitcases start at around $500, well above Samsonite’s own-brand prices of $100 to $300 and its lower-end American Tourister luggage that costs $100 and below. Samsonite said Thursday it would buy New Jersey-based Tumi for $26.75 a share, a 38% premium to the stock’s weighted average price for the five days through March 2.

The deal “will meaningfully expand our presence in the highly attractive premium segment of the global business bags, travel luggage and accessories market,” Samsonite chief executive Ramesh Tainwala said in a news release.

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The market reacted positively to the deal, with Tumi shares in New York closing Thursday up 30% at $26.21 and Samsonite ending up 1.3% in Hong Kong trading.

Tumi, which had sales of $547.7 million in 2015, makes products ranging from rolling luggage to tablet cases and briefcases. The company has more than 100 of its own stores and products are also sold at high-end department stores and other retailers.

Samsonite said it intends to expand Tumi’s reach in international markets — currently, the brand gets 68% of its sales in North America, with just 17% coming from Asia and 14 percent from its Europe, Middle East and Africa division.

“We can use the machine of Samsonite foot soldiers on the ground to expand Tumi’s global footprint. Tumi can help us cover our gaps,” Tainwala said on a conference call with investors.

Tumi is strong in women’s bags and is “far better in terms of understanding and designing business products,” he noted.

Samsonite has expanded rapidly outside North America and global sales account for 68% of overall revenue. “The deal really transforms Samsonite. We think scale is its number one advantage now,” Aaron Fischer, an analyst at CLSA, told the Wall Street Journal.

The brokerage estimates that after the deal, Samsonite will have a combined 14% share of the global luggage market.