Image source: Visual China
Blue Whale financial reporter Wang Hanyi
On January 5, Anta Sports (02020. HK;82020.HK) announced on the Hong Kong Stock Exchange that Amer Sports, a non-wholly-owned subsidiary of its joint venture Amer Sports Holdings (cayman) Limited, has submitted a prospectus to the U.S. Securities and Exchange Commission (SEC) to be listed on the New York Stock Exchange under the ticker symbol AS.
Image source: ANTA announcement
Amer Sports has a strong underwriter lineup, with Goldman Sachs, Bank of America, JPMorgan Chase, Morgan Stanley, Citigroup and UBS as joint lead underwriters, and more than 10 investment banks participating in the offering.
Return to the capital markets
Founded in 1950, Amer Sports is a Finnish sporting goods company headquartered in Helsinki, Finland. It has a number of high-end brands such as Arc'teryx, Salomon and Wilson, covering outdoor, skiing, tennis, golf and other sports fields, with products sold to more than 100 countries and more than 10,000 employees worldwide.
Amalfen Sports' brand Image source: Amer Sports prospectus
According to the prospectus, in 2019, a consortium jointly established by Anta Sports, FountainVest SPV, Anamered Investments and Tencent SPV made a cash takeover offer to acquire all the issued shares of Amer Sports for a total purchase price of about 4.6 billion euros. It is worth mentioning that Anamered Investments is an investment company founded by Chip Wilson, the founder of the Canadian yoga movement brand lululemon.
The tender offer was completed in March 2019, and ANTA Sports, together with other consortium members, owns the entire issued share capital of Amer Sports through AS Holding. After the completion of the transaction, Anta Sports will hold 58% of the shares, FountainVest SPV and Anamered Investments will each hold 21%, and Tencent will participate through FountainVest SPV.
According to the prospectus, the institutional investors who currently hold more than 5% of the shares are still these four.
According to the disclosure, the company has secretly submitted listing application documents to the SEC as early as August 11, 2023. This is the company's return to the capital markets after being acquired by China's Anta Sports in 2019 and delisted from Nasdaq Helsinki.
Therefore, the prospectus disclosed this time is also the first time that Amer Sports has disclosed the group's operation since 2018.
图片来源：Amer Sports 招股书
The proportion of Archaeopteryx and Salomon performance in Greater China has soared
In 2019, Amer Sports restructured and simplified its corporate structure, transforming its brands across three core segments to a direct operating model. After the completion of the acquisition, revenue growth accelerated, with a CAGR of 20.4% from 2020 to 2022, and gross margin expanded from 47.0% to 49.7% over the same period.
By region, as of the first nine months of 2023, 40% of the company's revenue came from the Americas, 33% from EMEA, 8% from Asia Pacific (excluding Greater China), and 19% from Greater China.
图片来源：Amer Sports 招股书
According to the prospectus, from 2020 to 2022, Amer Sports' revenue in Greater China increased from US$202 million to US$524 million at a compound annual growth rate of 60.9%, and the proportion of revenue increased from 8.3% to 14.8%, and in the first three quarters of 2023, the revenue in Greater China increased by 67.6% year-on-year to US$593 million, exceeding the revenue scale in Greater China in 2022, and the proportion of revenue further increased to 19.4%.
图片来源：Amer Sports 招股书
Since 2018, Amer Sports' capabilities in Greater China have continued to expand, with the total number of Amer Sports employees in the region increasing from approximately 450 to 800 as of September 30, 2023.
In terms of brand penetration in Greater China, as of the first nine months of 2023, Amer Sports has 63 Arc'teryx retail stores, 30 Salomon owned retail stores and 67 distribution points (including owned retail stores and partner stores) in Greater China, an exponential increase from 13 in 2019.
According to the prospectus, the total revenue of the three major brands of Arc'teryx Salomon and Wilson has accounted for more than 90% in the first three quarters of 2023, of which the revenue of Arc'teryx, Salomon and Wilson accounted for 30.8%, 31.1% and 28.4% respectively.
Arc'teryx is Amer Sports' most well-known brand in China. In the first three quarters of 2023, Arc'teryx's revenue surged 61.8% year-on-year to US$941 million, of which Greater China contributed 48% of revenue, making it the largest market. In addition, Arc'teryx's loyalty program has more than 1.7 million members in Greater China, up from 14,000 in 2018.
Cheng Yu, a professional investor, said: "ANTA's marketing operations for Arc'teryx relying on the Beijing Winter Olympics were very successful. Not only has this top outdoor sports brand been widely known, but the layout and interior of the offline store are consistent with its high-end positioning. As a result, a wave of consumption boom has been successfully set off. ”
Focusing on the core brand, the "loss" comes from divestment
From 2020 to 2022, the company's revenue increased from $2.4 billion to $3.5 billion, at a CAGR of 20.4%, gross margin increased from 47.0% to 49.7%, net loss increased from $237 million to $252 million, and adjusted EBITDA increased from $311 million to $453 million, at a CAGR of 20.6%.
In the first three quarters of 2023, Amer Sports' revenue increased 29.9% year-over-year to $3,053 million, gross margin increased to 52.2% from 49.4% in the same period in 2022, net profit loss increased 9.1% year-over-year to $114 million, and adjusted EBITDA increased 61.3% to $422 million from $262 million in the same period in 2022.
According to the prospectus, most of Amer Sports' book "losses" came from valuation losses caused by the company's divestment of other sub-brands. Since 2018, Amer Sports has been transforming, focusing on its core brands and streamlining its product portfolio. From 2019 to 2022, the company's divested brands include Mavic, Suunto and Precor.
In July 2019, Amer Sports completed the divestiture and sale of its French cycling brand Mavic, in December 2020, Amer Sports sold its fitness equipment company Precor for $200 million to Peloton, a leading U.S. smart fitness company, and in January 2022, Amer Sports sold its Finnish dive computer and tools and sports watch brand Suunto to a Chinese wearable technology company Liesheng (Liesheng Technology).
According to the prospectus, Amer Sports intends to use the net proceeds from the offering to repay all outstanding borrowings under the existing shareholder loans.
Hu Sen, founding partner of NASDAQ listing counseling agency PINX Capital, told the Blue Whale financial reporter that Amer Sports' listing in the United States can improve its brand exposure and reputation, increase its competitiveness and attractiveness in the global market, and obtain more financial support and flexibility. "These funds can be used to repay debts, increase R&D investment, expand production capacity, open up new markets and channels, carry out mergers and acquisitions and strategic cooperation, etc., to improve the sustainable development of its business. ”
In addition, this is also an important step for ANTA Sports to realize its internationalization strategy. "As the largest shareholder of Amer Sports, ANTA Sports will achieve a 'secondary listing' with the listing of Amer Sports, gain more capital returns and brand voice, and achieve strategic synergy. Hussen added.