Shandong Ruyi Technology Group takes majority stake in SMCP

Shandong Ruyi Technology Group acquired a controlling interest in SMCP on 11 October 2016, following an exclusivity agreement signed on 31 March, works council consultation and regulatory approvals. KKR, which had held the majority since June 2013, retained a minority interest, while the founders and management reinvested alongside the new shareholder. J.P. Morgan underwrote the acquisition debt as sole underwriter. SMCP designs and sells women’s and men’s clothing and accessories through three Parisian brands positioned between high street retail and luxury: Sandro, Maje and Claudie Pierlot. It operated 1,118 points of sale at the end of 2015, of which 906 were its own and 212 run by partners, across 33 countries. Net sales had grown 33% in 2015 and 19.2% over the first half of 2016. The purchase extended a Chinese manufacturer into the brands its factories supply. Having built an integrated chain from fibre to finished garment, the acquirer held the production capacity but not the names under which such clothing commands its price, and the acquisition supplied the latter. Asian distribution ran in the opposite direction, the acquired company holding limited presence in markets where the acquirer operated several thousand points of sale, which defined the development the transaction was intended to enable. Evelyne Chetrite and Judith Milgrom, who founded Sandro and Maje and continued to direct their creative work, remained in place with chief executive Daniel Lalonde, and the design studios stayed at the Paris headquarters. J.P. Morgan advised Shandong Ruyi Technology Group, with Latham & Watkins as legal counsel, while Bank of America Merrill Lynch and UBS advised SMCP and KKR, with Bredin Prat as counsel, alongside Edmond de Rothschild, Goodwin, Hoche, Mayer Brown, Oloryn Partners and Sekri Valentin Zerrouk.