WWD : Chinese E-commerce Giants Make More Luxury Moves

Chinese E-commerce Giants Make More Luxury Moves
Big data and online to off-line initiatives are being used by Alibaba and JD.com to attract luxury partners to their respective platforms.

SHANGHAI — Both Alibaba’s Tmall’s Luxury Pavilion and JD.com’s Toplife site unveiled new initiatives and partnerships this week, a sign that China’s e-commerce giants have their sights firmly set on capturing the country’s young, and growing, market of online luxury consumers.

For it’s part, Tmall held a forum in Shanghai on Wednesday for luxury brand representatives, revealing the next phase of its app-within-an-app Luxury Pavilion infrastructure — the launch of the Luxury Pavilion Club.

Since its launch in August 2017, the Luxury Pavilion, which can be accessed through Alibaba’s Tmall and Taobao apps, has seen 45 brands — including Armani, Burberry, Hugo Boss and La Mer — sign on to create their own stores through the platform. The Luxury Pavilion Club will be an exclusive membership program in which “high-potential” consumers are tapped for membership and gain access to more personalized service and promotions.


The two-tiered club membership offers flexible payment options, purchase priority and door-to-door returns, making the purchasing process easier for all members. They are invited to join the club if they meet certain criteria (for example, have browsed or purchased luxury products, are Tmall Super Members or very active users). Premier members will also have access to exclusive events and the opportunity for fans to meet celebrities.

According to a McKinsey report, Chinese customers are expected to contribute 781 billion yuan, or TK, to the global luxury market by 2020, while Tmall data shows that digital savvy Chinese Millennials represent 80 percent of the total number of Luxury Pavilion users. In her presentation at Wednesday’s forum, Tmall’s president of fashion and luxury Jessica Liu introduced six “personas” of the platform’s luxury shoppers, which have been developed using Alibaba’s big data operations.

Consumers aged 18 to 29 were split into “personas” including “Hedonist” (accounting for 10 percent of luxury consumption on Tmall) and “Explorer.” Both categories have an average age of 26 and the Explorers still haven’t reached their spending potential – they make up 39 percent of the population at large, according to Alibaba, but only 18 percent of luxury consumption, with their most popular categories unsurprisingly including beauty and shoes.

In all, according to Liu, 24 percent of consumers account for 64 percent of luxury sales on Tmall.

“My media team no longer uses the traditional definition of this age, top-tier cities, college educated, I demand my team give me persona metrics and run the data to see what show they are watching on Youku, what brands are they associating with,” Alibaba chief marketing officer Chris Tung said.

“We have nearly 600 million customers and we know not all of them are your customers, but maybe 10 or 20 million of them are and we want to help you talk to them directly. When you get into the lifestyle of your target, you are not just selling them a watch, a bag, a pair of shoes. You are sharing with them the story of your brand, a lifestyle.”

Meanwhile, on Friday JD.com revealed the addition of four luxury brands to its Toplife site at an event in Shanghai. Oscar de la Renta, Mulberry, Italian label Anteprima and knitwear brand Barrie joined names already on the Toplife roster, which include Alexander McQueen, Yves Saint Laurent and Derek Lam.

Unlike Tmall’s Luxury Pavilion, Toplife, which launched in October 2017, is a stand-alone app outside of the main JD.com infrastructure, featuring high end logistics and marketing support and it’s headline grabbing “white glove delivery service.”

“Merging online and off-line for luxury brands will continue to be a long-term process globally for the e-commerce industry. But as Chinese consumers are increasingly interested in discovering new luxury brands and expressing their individuality through fashion, there has been a new wave of interest in reaching those consumers effectively. So far brands have been interested to have a partner in China that both protects their IP and can deliver a customer experience that upholds their image and the experience their customers are used to,” said Shengli Hu, president of fashion and lifestyle at JD.com.

“If you look at luxury online, it’s really lagged other verticals. I think that high-end fashion brands are excited by the path we are blazing for what a luxury online experience can be.”

An important consideration for both Tmall and JD.com is the online to off-line experience, ensuring that online luxury retail can work as a complement to the in-store experience (where it’s available to consumers; in China, after all, a great many people live in regions not served by luxury bricks-and-mortar retail).

“Chinese consumers have shown over time that what their willingness to buy online can change, and very quickly. Because off-line retail was underdeveloped in China, they have also shown a willingness to shop new categories before consumers in more developed markets,” Hu said.

“Fashion is a relatively tricky business for e-commerce, but with the right level of service we believe it will get easier. That’s why JD created Toplife, and also why we’re also investing in the technology to personalize shopping experiences based on taste, to work with fitting issues, and more, in the long-term.”

>>> Fluxys, Enagas and Snam named as possible buyers of Desfa

Fluxys, Enagas and Snam named as possible buyers of Desfa - report (translated)

A consortium of Belgian Fluxys, Spanish Enagas [BME: ENG] and Italian Snam [BIT: SRG] is one of the two parties that want to take over Greek government owned natural gas company Desfa, Belgian daily De Tijdreported, without naming sources.
The Greek privatisation committee might on Tuesday decide about the sale of the majority share in Desfa. Fluxys and its associates see Greece as an important chain to retrieve natural gas from new gas fields in Azerbadjan and the Middle East.
Link to original source (De Tijd)

>>> Qinqin Foodstuffs to receive HKD 2.3 per share offer from Sure Wonder

Qinqin Foodstuffs to receive HKD 2.3 per share offer from Sure Wonder
14 APR 2018
Qinqin Foodstuffs Group [HKG: 1583], a China-based Jelly products manufacturer, announced that Sure Wonder Limited plans to make an HKD 2.3 per share offer for the company:
The Company was notified by Sure Wonder Limited (“the Offeror”) and Vendors that after trading hours of the Stock Exchange on 13 April 2018:—
(i) Easy Success and the Offeror entered into the Easy Success Transfer Document, pursuant to which Easy Success has agreed to sell and the Offeror has agreed to purchase 40,000,000 Shares, representing approximately 7.01 % of the issued Shares as at the date of this joint announcement, for a total cash consideration of HKD 92,000,000 (being HKD 2.3 per Share);
(ii) An Ping and the Offeror entered into the An Ping Transfer Document , pursuant to which An Ping has agreed to sell and the Offeror has agreed to purchase 44,933,950 Shares, representing approximately 7.87 % of the issued Shares as at the date of this joint announcement, for a total cash consideration of HKD 1.
The Acquisition will be completed when the transfer of the Sale Shares through the CCASS system has been completed, which is currently expected to happen two business days after the date of the Transfer Documents. The total cash consideration in respect of the Acquisition will be paid in full by the Offeror to the Vendors upon completion of transfer of the Sale Shares.
MANDATORY CONDITIONAL CASH OFFERS
As at the date of this joint announcement, the Offeror is interested in 29,555,978 Shares, representing approximately 5.18% of the issued Shares as at the date of this joint announcement. Immediately upon completion of the Acquisition, the Offeror will be interested in 114,489,928 Shares, representing approximately 20.06 % of issued Shares as at the date of this joint announcement.
As the Vendors are members of the Offeror Concert Party Group, notwithstanding the Acquisition, the number of Shares in which the Offeror Concert Party Group is interested in will remain unchanged at 226,907,306 Shares immediately before and after completion of the Acquisition, representing approximately 39.76% of the issued Shares as at the date of this joint announcement. However, given the leader of the Offeror Concert Party Group will be changed as a result of the Acquisition, pursuant to Note 1 to Rule 26.1 of the Takeovers Code, the Offeror will be required to make a mandatory conditional cash offer for all the issued Shares (other than those already owned and/or agreed to be acquired by the Offeror Concert Party Group). Pursuant to Rule 13 of the Takeovers Code, the Offeror will make an appropriate cash offer to the Offer Optionholders to cancel all Offer Options.
Deloitte Corporate Finance will, for and on behalf of the Offeror, make the Offers in compliance with the Takeovers Code on the following basis:
The Share Offer
For each Offer Share .......................................................................................... HKD 2.3 in cash
The Option Offer
For each Offer Option held and to be cancelled ........................................ HKD 0.0001 in cash
The Share Offer Price of HKD 2.3 for each Offer Share under the Share Offer is the same as the highest price to be paid per Sale Share by the Offeror pursuant to the Transfer Documents. Pursuant to Rule 13 and Practice Note 6 of the Takeovers Code, the Option Offer Price would normally represent the difference between the exercise price of the Options and the Share Offer Price. Under the Option Offer, since the exercise price of the Offer Options, being HKD 2.56, is above the Share Offer Price of HKD 2.3, the Offer Options are out-of-money and the Option Offer Price is set at a nominal price of HKD 0.0001.
As at the date of this joint announcement, the Company has 570,696,557 Shares in issue and 8,560,000 outstanding Options and has no other relevant securities (as defi ned in Note 4 to Rule 22 of the Takeovers Code) as at the date of this joint announcement.
Principal terms of the Offers are set out in the section headed “Mandatory Conditional Cash Offers” below. Based on the Share Offer Price of HKD 2.3 per Offer Share and 343,789,251 Offer Shares and 8,440,000 Offer Options:
(a) Assuming no Offer Options are exercised and the Share Offer is accepted in full:
(i) the value of the Share Offer will be approximately HKD 790,715,277.30 ; and
(ii) the total amount to satisfy the cancellation of all Offer Options will be approximately HKD 844 . (b) Assuming all Offer Options are exercised and the Share Offer is accepted in full:
(i) the value of the Share Offer will be approximately HKD 810,127,277.30 (USD 103m); and
(ii) no amount will be payable by the Offeror under the Option Offer.
The Offeror intends to finance the total consideration of the Acquisition and Offers by the Loan.
Deloitte Corporate Finance, the financial adviser to the Offeror in respect of the Offers, is satisfied that sufficient financial resources are available to the Offeror to satisfy the consideration for the Acquisition and the full acceptance of the Offers.
The Offeror intends to maintain the listing of the Shares on the Stock Exchange following the close of the Offers.
DESPATCH OF COMPOSITE DOCUMENT
The Offeror and the Company intend to combine the offer document and the Company’s board circular in the Composite Document. Pursuant to Rule 8.2 of the Takeovers Code, within 21 days after the date of this joint announcement or such later date as the Executive may approve, the Offeror and the Company are required to despatch the Composite Document containing, among other things, (i) details of the Offers and their respective terms and conditions (including the expected timetable); (ii) the letter from the Independent Board Committee containing its recommendation in respect of the Offers; (iii) the letter of advice from the independent financial adviser to the Independent Board Committee in respect of the Offers; and (iv) relevant forms of acceptance and transfer, to the Offer Shareholders and Offer Optionholders. It is expected that the Composite Document will be despatched on or before 4 May 2018.
Further announcement(s) regarding the despatch of the Composite Document will be made by the Offeror and the Company as and when appropriate.
INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER
The Independent Board Committee has been established by the Company to make a recommendation to the Offer Shareholders and Offer Optionholders in respect of the Offers pursuant to Rule 2.1 of the Takeovers Code.
An independent financial adviser will be appointed, with the approval of the Independent Board Committee, to advise the Independent Board Committee in respect of the Offers and, in particular, as to whether the Offers are fair and reasonable and as to the acceptance of the Offers pursuant to Rule 2.1 of the Takeovers Code. A further announcement will be made by the Company as soon as possible after the appointment of the independent financial adviser. The advice of the independent financial adviser and the recommendation of the Independent Board Committee will be included in the Composite Document to be despatched to the Offer Shareholders and Offer Optionholders.
WARNING
Shareholders, Optionholders and potential investors should note that the Independent Board Committee has yet to consider and evaluate the Offers. The Directors make no recommendation as to the fairness or reasonableness of the Offers or as to the acceptance of the Offers in this joint announcement. Shareholders should read the Composite Document, including the recommendations of the Independent Board Committee in respect of the Offers and a letter of advice from the independent financial adviser, before forming a view on the Offers.
Shareholders, Optionholders and potential investors are advised to exercise caution when dealing in the securities of the Company. If Shareholders, Optionholders and potential investors are in any doubt about their position, they should consult their professional advisers.

>>> Shire/Takeda: Rare disease business seen attractive to other bidders

Shire/Takeda: Rare disease business seen attractive to other bidders

  • ADHD, hemophilia businesses present challenges
  • Full takeover could require involvement of other strategics
  • Takeda could instead pick up hemophilia, central nervous system franchises

Shire’s [LON:SHP] rare disease business is the most attractive part of its portfolio, several sector advisers and two industry executives said, following news that Takeda Pharmaceutical [TYO:4502] is exploring a takeover of the London-based pharmaceutical company.
Now that Takeda’s interest in Shire is in the public domain, other interested buyers can be expected to reach out proactively to Shire, two of the sector advisers said. The rare disease business is expected to draw the attention of a handful of strategic buyers, a third adviser said.
Strategics like Novo Nordisk [CPH:NOVO] , Pfizer [NYSE:PFE] and CSL [ASX:CSL] are unlikely to have a compelling case for buying out the whole company, two of the sector advisers said. Still, a deal for all of Shire may require the involvement of other strategics because it is too big for Takeda, this adviser added.
Yesterday, this news service reported that Takeda’s main banks are willing to lend JPY 2trn to JPY 3trn (USD 19bn to USD 28bn) or more if necessary to fund a takeover of Shire. An acquisition of all of Shire, however, would require substantial divestitures to hit Takeda’s stated leverage target, it was reported.
Nonetheless, Takeda CEO Christophe Weber reportedly said at a briefing for sell-side analysts last week that the company is weighing a bid for all of Shire. The Tokyo-listed company has until 25 April to make a firm bid or walk away.
Shire appears to be a willing seller, while Weber has ambitious plans to grow the company, one of the sector advisers said.
There are some obstacles to a potential offer from Takeda. Minority investors in Shire previously told this news service that they questioned the attractiveness of Takeda’s Tokyo-listed shares. There are also minor regulatory obstacles to Takeda making an equity-rich offer, as previously reported.
If Takeda opted to instead bid for only part of Shire, the most likely outcome would be that it picks up the company’s hemophilia and central nervous system franchises, with another strategic picking up the rare disease asset, the third adviser said.
Shire has already announced that it is restructuring into two business units. In January, at the JPMorgan conference in San Francisco, the company said there is a strong business rationale for creating the two divisions: a Rare Disease Division and a Neuroscience Division. Shire expects to report the operational performance metrics of each division separately starting in 1Q18.
This came after Shire announced a strategic review of its neuroscience division in August, flagging the possibility of a sale or listing of the unit. According to the company, this strategic review is still ongoing.
Shire's neuroscience unit, which is focused on ADHD, as well as its hemophilia drugs franchise are both challenged, two industry executives and a fourth sector adviser said.
The neuroscience unit faces exposure to a patent cliff for ADHD drug Vyvanse in 2023. Sector advisors have previously told this news service that the business could face potential liabilities if children who are now on ADHD medication see side effects kick in during adulthood.
In hemophilia, Shire acquired specialist Baxalta for USD 32bn in 2016, but that business is also facing challenges, with Roche’s [SWX:RO] Hemlibra - a hemophilia medication expected to achieve blockbuster status - posing stiff competition.
If Shire wants to maximize its attractiveness for a potential deal, it would have to neutralize the impact of these weaker businesses, said the fourth adviser. No-growth assets would have to be divested to smooth the path for the entire company to sell, the second executive said, describing the hemophilia business in particular as a declining asset.
The universe of potential buyers for the hemophilia business is limited, the first executive said.
It could attract interest, however, from buyers in Asia. Hemophilia treatment and products could be attractive to Hualan Biological Engineering [SHE: 002007], a major blood products maker in China; Creat Goup, the parent company of Hualan’s competitor Shanghai RAAS [SHE: 002252], and others who are actively searching for blood product acquisitions in Europe, said an adviser to Chinese companies.

Plasma collection is very competitive in China, with demand exceeding supply because the Chinese government has not granted any plasma fractionation licenses since 2001, the same adviser explained.

Both Creat and Hualan made a bid for plasma protein products and biotherapeutic drugs company Biotest [ETR: BIO], as previously reported by this news service. Creat acquired Bio Product Laboratory in 2016 and Biotest in 2017, while Hualan is rumored to be eyeing Kedrion, the Italian blood plasma manufacturer, the same adviser said.

Given concerns around foreign buyers getting access to large patient data sets and the sensitive nature of hemophilia products, however, it may be difficult for a Chinese buyer to pursue a deal for Shire’s hemophilia business, the same adviser cautioned.
Shire did not respond to request for comment.