RPT-BREAKINGVIEWS-Anta's Puma deal sets up a gruelling course

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Katrina Hamlin

HONG KONG, Jan 27 (Reuters Breakingviews) - Anta Sports Product's 2020.HK Puma PUMG.DE deal is setting up a daunting challenge. The $27 billion Hong Kong-listed Chinese sportswear giant agreed on Tuesday to buy the Pinault family's 29% stake in the German brand for $1.8 billion. The pair is well-matched and Anta managed to quadruple the value of Amer Sports AS.N, owner of winter sports specialist Salomon and racket maker Wilson, after it bought that company in 2019. But a punchy premium on its latest deal and minority stake may make it hard to perform this time.

Puma is loss-making and has been struggling in the People’s Republic, which it blamed for a 9% fall in Asia-Pacific sales in the three months ended in September. Anta, which has around a quarter of the China market according to Euromonitor, is well positioned to help. Meanwhile, Puma’s strengths in popular segments like soccer, running, and more casual sneakers – drawing on its decades-old archive of designs – would fill gaps in Anta’s portfolio at home and abroad.

Anta's purchase price of 35 euros a share trails the Frankfurt-listed company’s historical highs; the stock peaked at around 115 euros in 2021. Even so, it represents a 62% premium to the close on Monday. The buyer will have to exploit synergies with its target to the fullest to justify that outlay. It values the whole enterprise at about 7.3 billion euros, roughly $8.6 billion.

If Puma earned an operating income of roughly 200 million euros in 2027, as per analyst forecasts gathered by Visible Alpha, allowing for a 25% tax rate, that would translate to a weak 2% return, far below Puma’s 10.5% weighted average cost of capital. But Anta isn't even buying control.

How much influence Anta will have at the company is unclear: it says it will seek "adequate" representation on the supervisory board "as soon as possible". The Pinault family has two seats. If Anta attempts to buy more of the company, the terms of its current stake purchase will require it to compensate the family by an unspecified amount.

What’s more, sneaker sales could be losing speed: estimates for earnings per share have fallen by about 20% on average across the sector since the beginning of 2025, analysts at Bank of America point out. Sneakers accounted for around half of all shoe sales by the end of the pandemic, more than twice historical levels, but sports participation isn’t growing much in the U.S., a key market: that suggests the trend could be running out of steam. With Puma, Anta has set itself a challenging course.

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CONTEXT NEWS

China's Anta Sports Products said on January 27 it would buy a 29.06% stake in Puma from Artemis, an investment vehicle of the Pinault family, for 1.5 billion euros ($1.8 billion) cash, making it the biggest shareholder in the German sportswear maker.

The Hong Kong-listed company will pay 35 euros per share in cash for 43 million Puma shares, Anta said in a stock exchange filing. The price is a 62% premium to Puma's 21.63 euros closing share price on January 26, when shares closed 17% higher. Anta shares rose 3.4% in early trading on January 27. Anta said it will fund the deal from its internal resources.

Entities related to Anta International, representing about 53% of the company's voting capital, have committed to vote in support of the deal. Anta added it "intends to seek adequate representation" on Puma's supervisory board as soon as possible.

(Editing by Una Galani; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on HAMLIN/katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))