Bregenz - China’s Fosun has agreed to buy a controlling stake in loss-making luxury hosiery manufacturer and retailer Wolford from its founding family.
The €55 million offer will then be followed by an offer to remaining shareholders as the Chinese firm looks to complete a takeover.
Fosun has agreed to pay €33 million for the 50.9 per cent stake and will provide up to €22 million euros as part of a capital increase. It said it intends to offer other shareholders €13.67 per share to gain full control.
"We welcome the entry of a financially strong core shareholder which is experienced in the luxury sector and will enhance our access to Asian markets," said Axel Dreher, CEO of Wolford. "This confirms the reputation of our brand and its growth opportunities.”
Brigitte Kurz, CFO of Wolford, added: “The capital increase will strengthen our long-term capital base and our liquidity. This enables us to accelerate the development of our promising online business and the redesigning of our market appearance."
As well as struggling with falling demand for its luxury tights, bras and shirts, Wolford has been suffering logistics problems and dealing with management upheaval in recent months and has been loss-making for more than two years.
Towards the end of 2017, Wolford accelerated the implementation of its previously announced cost reduction measures, a move that mainly involved the downsizing of its administrative staff at its headquarters in Bregenz, Austria.
Wolford had already decreased its workforce by 41 full-time positions since July 2017, partly by natural attrition or by not filling vacant positions. The personnel level at company headquarters in Bregenz was cut by a further 15 employees before the end of October.
As a result, Wolford has cut down on its total staff by 56 full-time employees since the beginning of July, resulting in expected cost savings of more than €3 million annually which should be fully effective starting in the 2018/19 financial year.
The streamlining of the administration was part of a comprehensive restructuring program aimed at helping Wolford to return to profitability. The focus is on adjusting personnel capacities to current revenue figures, systematically optimizing all processes and strategically realigning some areas of the company’s business operations.
Around 50 investors mainly from North America and Asia had shown interest in taking over the founding family’s stake after it announced its intention to sell in June, Wolford said.
Fosun recently became the majority shareholder in struggling French fashion house Lanvin and also has stakes in Italian high-end menswear label Caruso and U.S. knitwear firm St. John Knits.