Investment case

4 March 2016 By Quentin Webb

The luggage giant is buying its smaller rival for $1.8 bln, or 13.6 times EBITDA. That’s a big price tag. But Tumi’s upmarket cabin bags will boost Samsonite’s appeal to CEOs and other high-rollers. Its new owner could also help the brand travel further outside the United States.

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Tumi IPO should bag Doughty Hanson a big return

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Samsonite International, the world’s largest luggage maker, agreed to buy U.S. rival Tumi for $1.8 billion to bolster its presence in North America and expand its range of higher-end briefcases, backpacks and cabin bags.

The all-cash deal values Tumi at $26.75 a share, Hong Kong-listed Samsonite said in a statement on March 4. That implies a 38 percent premium to Tumi’s share price for the five days to March 2, the day before the Wall Street Journal said the duo were close to agreeing a takeover.

Net of the target’s cash, the deal gives Tumi an enterprise value of $1.7 billion, or 13.6 times last year’s adjusted EBITDA. Samsonite will fund the deal with up to $1.925 billion of new term loans plus a $500 million revolving credit facility.

By 1010 local time (0210 GMT) Samsonite’s shares stood 1.7 percent higher at HK$24.10 a share.

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