Failing Hong Kong department-store group Sincere receives $500m takeover bid

Shenzhen electronics company Realord Asia Pacific has lodged a HK$500 million (US$64.5 million) takeover bid for failing Hong Kong department store group Sincere.

Realord has conditionally agreed to acquire the majority 50.4 percent stake in the retailer owned by Win Dynamic and a further 19.8 percent interest held by companies linked to Sincere. Now it has made a condition bid to acquire the balance for up to $140 million, representing a 9 percent premium on the price the company’s shares traded at last on May 5.

Sincere, founded in 1919, has five department stores in Hong Kong, the largest of which, on Nathan Road in Kowloon, is just 31,000sqft. It recorded a loss of $130 million last year and has already flagged an even higher loss for the current year, some 10 to 15 percent worse. That will mark the eighth consecutive annual loss for the company which was already in dire straits before the coronavirus hit.

Sales last year from five stores reached just $310 million and it has closed two outlets since 2013.

Realord is owned by Shenzhen entrepreneur Bryan Lin Xiaohui and produces smartphones and electronics, including flatscreen monitors. The company had already loaned $80 million to the department-store group in April to allow it to continue trading.

Analysts suggest that Realord sees acquiring Sincere as an opportunity to gain a Hong Kong listing and expertise to help it roll out department stores on the mainland – although it is difficult to understand the positive role model of a company that has traded at a loss for so long.