Shares of Tumi rose 30% in premarket trading Friday after new broke that the luxury luggage maker would be acquired by Hong Kong-based Samsonite for $1.8 billion a day earlier.
Shares are now trading up 3% since the market opened.
The sudden buy in by investors during early market trading is likely in part due to the hefty premium Tumi’s rival, Samsonite (SMSOF), is offering.
Samsonite, the largest luggage maker in the world, plans to pay for the transaction in cash, at $26.75 per share. That represents a premium of roughly 38% based on Tumi’s five-day average price, according to a joint Thursday press release. Shares of Tumi (TUMI) are now hovering just below that premium, at $26.61.
“It is a perfect match in many aspects such as retail channels and regional mix, category mix and even price points,” said Boyoung Kim, an analyst at BNP Paribas to Reuters.
For Samsonite, the acquisitions allows the company to diversify its product base. For Tumi, the deal is a way to tap into Samsonite’s growing global infrastructure, allowing the New Jersey-based luggage maker to expand further into key markets such as Asia, Europe, and South America.
The acquisition comes as as part of Samsonite’s continued global acquisition splurge. Samsonite has also purchased French luggage brand, Lipault, U.S.-based cellphone case maker Speck, and Germany leather goods manufacturer, Hartmann in the past two years.
Samsonite may also be keen to offset falling demand from a key market for travelers and luxury-goods buyers in recent years: China.
The deal is expected to go through in the second half of the year, pending regulatory and shareholder approval.
