HONG KONG • Luggage giant Samsonite said yesterday it would buy United States luxury bag maker Tumi in a deal worth US$1.8 billion (S$2.5 billion).
Analysts said the deal would give Samsonite a foothold in the lucrative Chinese high-end market.
In a statement to the Hong Kong exchange, where it listed five years ago, Samsonite said it would pay US$26.75 a share for the firm - a third more than its value on Wednesday before the likely buyout was sounded.
Samsonite said Tumi was a "perfect strategic fit" for its business.
Samsonite chief executive officer Ramesh Tainwala said in a separate statement: "This is a transformational acquisition for Samsonite.
"It will meaningfully expand our presence in the highly attractive premium segment of the global business bags."
Financial analyst Jackson Wong of brokerage firm Simsen Financial group said the purchase was a "good move".
"Tumi is a premium brand name... higher-end names would enhance (Samsonite's) brand image," Mr Wong told Agence France-Presse.
"Chinese people love to buy Samsonite. However, in the last few years, they have been buying extremely luxurious suitcases, and that's why they are trying to go upscale," he added.
In recent years, several Western brands have been setting up shop in China, widely considered the world's biggest luxury market as a burgeoning middle class drives a shopping frenzy.
France's Hermes, known for its luxury handbags, opened a four-storey flagship store in Shanghai in 2014.
US-based Samsonite raised US$1.25 billion in an initial public offering in Hong Kong in June 2011, one of several Western brands, including Prada and Esprit, seeking to use the city to boost their presence in fast-growing Asian markets, particularly China.
But the world's second-largest economy expanded 6.9 per cent last year, the worst performance in a quarter century and a far cry from the years of double-digit increases.
The country's luxury market also took a hit from a years-long corruption crackdown.
Mr Tainwala told Bloomberg News: "The luxury segment has been affected because of austerity in China, but that doesn't take away from the whole story of Tumi. There's great opportunity there."
The luxury brand, which sells bags for as much as US$1,300, has more than 170 stores worldwide, with plans to open up to 20 more this year, according to Bloomberg.
Financial analyst Dickie Wong said Samsonite made the right decision, despite slowing growth in China. Said Mr Wong, who is executive director of research for Kingston Securities: "The Chinese economy is definitely slowing down and the (tourism) market is not growing as fast as it was a couple of years ago.
"But on the other hand, the US market is doing very well."