Giordano suspended amidst Japanese acquisition reports

Aug. 7, 2006 (China Knowledge) – Shares of Hong Kong-listed Giordano International Ltd., a retailer of casual apparel and accessories under the Giordano and Bluestar Exchange brands, were suspended at 9.36 a.m. Friday pending the release of an announcement in respect of a price sensitive matter.

A Reuters report quoted the Hong Kong Economic Times as saying that Giordano had rejected a proposal from UNIQLO, a casual wear chain owned by Japanese retailer Fast Retailing Co. Ltd., to acquire a stake in the company.

The Hong Kong Economic Times also quoted an unnamed source as saying that the Japanese company has been seeking the support of the major funds that currently hold shares in Giordano to allow a takeover.

Unlike most publicly-traded companies in Hong Kong, Giordano is held mostly by institutional investors rather than board members. At present, Aberdeen Asset Management PLC holds 14.9% while Harris Associates owns another 14.9%. The company’s chairman, Lau Kwok Kuen, owns a mere 1.62%.

Meanwhile, a Bloomberg report quoted CIO of Harris Associates David Herro as saying that Fast Retailing had been in touch with the company. Said Herro: “They’re interested. I don’t know whether that interest is necessarily to buy 100%.”

So far, Giordano management has refused to comment on the newspaper report and the share suspension. The company’s shares closed at HK$4.07 on Thursday. Fast Retailing has also declined comment.

Fast Retailing, controlled by Japan’s sixth-richest man Tadashi Yanai, is Asia’s largest retailer. It operates in three business segments: UNIQLO sell casual clothing and accessories through a series of chain stores selling the UNIQLO brand; the apparel segment manufactures and sells clothing; and a third segment operates golf ranges for practice.

Giordano manufactures apparel and sells it through its own brand of chain stores as well as through third parties. Last year, the company reported HK$4.41 billion in revenue with a net profit margin of 4.77%.

The company operates over 1,400 shops across Asia and a stake in Giordano would help UNIQLO expand further into areas where Giordano is well-rooted.