DICKSON POON’S NY TRIP: SIZING UP M&AS AND CHANCES FOR AN IPO
Byline: Valerie Seckler
NEW YORK — Dickson Poon is poised to pounce.
The Hong Kong fashion tycoon was here Monday on a two-day whirlwind through New York and Boston with two main missions in mind: to arrange to take a closer look at what Poon told WWD were a growing number of potential merger, acquisition and investment partners that could fuel his fledgling Dickson North America unit, and to get a better sense of the stock market’s mood in gauging whether to float an initial public offering of his nascent Dickson Cyber Concepts subsidiary in the U.S. this year or wait until 2001.
“One of the main reasons behind this visit is to explore some major investment possibilities we have identified in the U.S.,” said a relaxed and remarkably refreshed-looking Poon, founder and group executive chairman of Dickson Concepts International Ltd., who noted that he makes a handful of business trips to the U.S. each year on a route via Europe, so that he arrives at fashion capitals like London, Paris and New York in the morning and can begin his workday directly, after sleeping in flight.
“If you look at those businesses today, compared with a month ago, their valuations have gotten more attractive, due to the falling levels of various stock prices,” Poon said in an exclusive interview with WWD. He was settled in at Dickson North America’s new headquarters, which opened Oct. 1 at 1441 Broadway, where the Fashion District meets Times Square — a metaphor that’s not lost on Poon, who has attempted to inject some of the energy, excitement and entertainment that can be found in the theater district into his own groundbreaking, interactive retail project in Hong Kong, Dickson Cyber Express. “So I am here today, and in Boston tomorrow, to try to get our people talking with those companies.
“We are ready to make a transaction at any time,” Poon continued, “as long as it meets our fundamental criteria: it offers a favorable valuation; synergies exist between our operations and those of the potential investment; and whether there is a strong management team in place, or whether we need to put a [new] management team in place. All told, we won’t take on a major investment here, unless we feel we have the expertise to commit to its success.”
While Poon did not hesitate to point out that his list of potential takeover targets has lengthened since he disclosed to WWD on Sept. 12 that he was actively scouting for big deals here, he kept those names to himself Monday. Nor would he reveal whether Dickson North America is most likely to pursue deals to acquire brands with which it already has license and distribution agreements or for a player that it has flirted with before, like Barneys New York, which Dickson Concepts International eyed for a possible acquisition back in 1998.
Poon has said, however, that major merger and acquisition deals here would not be limited to the high end of the market. He pointed out that Dickson Concepts International Ltd., which produced sales of roughly $440 million in its fiscal 2000 year ended March 31, has license and distribution pacts ranging from top-end labels like Bulgari and Chopard, to “mid-high-end” names such as S.T. Dupont and Hermes, to brands with more moderate opening prices, including Kenneth Cole, Tommy Hilfiger, Charles Jourdan and Guy LaRoche.
“There are lots of good brands around to invest in, whether they are brands we already have a relationship with or not,” Poon stated simply. He declined comment on whether Dickson North America has yet engaged an investment bank to represent its interests in the U.S.
Poon, who was dressed casually in an autumnal gold blazer and turtleneck, appeared to be enjoying his first visit to the company’s headquarters in North America since the offices opened, laughing easily and expressing enthusiasm for the projects ahead.
“The headquarters in New York are our home office to aggressively analyze and explore merger and acquisition activities, as well as to form a home for Tommy Hilfiger handbags,” Poon explained. Dickson holds the North American license for Hilfiger handbags. “The opening of our headquarters office in North America is very important to us, as our stated objective is to have a big presence in all major markets in the world. It’s an important symbol of a bigger commitment on our part.”
Currently, Dickson North America employs 40 people and occupies about 12,000 square feet at 1441 Broadway, a space that, Poon said, could accommodate growth of the unit’s Hilfiger handbag license, but one that would need to be supplemented with additional footage “if we do a major acquisition.”
“We started the U.S. business with Tommy Hilfiger bags and we’d like to grow that because in this country, I believe it is very important to have scale,” Poon said when asked of his plans for Dickson North America’s first license.
“Eventually, I think it can be a $100 million business. At the same time, we’d like to focus on acquisitions because that is the quickest way to build scale. That’s what we want Chuck to focus on — identifying [merger and acquisition] candidates,” Poon added in referring to Charles (Chuck) Jayson, president and chief executive of Dickson North America.
“It is my job to seek out upscale hip and luxury brands, both for individual alliances and mergers and acquisitions that would create scale to benefit from the scope of our distribution network,” said Jayson, who joined Poon for the interview Monday.
“After we acquire certain businesses that are of scale, they could spawn further opportunities, such as start-ups.”
Still hovering on the horizon, Poon said Monday, is the possibility of an IPO in Dickson Cyber Concepts this year.
“What has changed is that the stock market has gotten even more volatile,” Poon said of the U.S. market’s activity in the five weeks or so since he revealed the plan to spin off to the public Dickson Cyber Concepts, a subsidiary of Dickson Concepts International. “If the market conditions meet our requirements, and we get the OK from regulatory officials, then we could still float an offer this year.”
When asked if that volatility is likely to forestall an offer here, Poon responded: “The fact the market has been so volatile means it can go either way — for better or worse — quickly. What it means for us is we have to be ready to push the button when the time is right. It is still possible that we will make the offer on the GEM and Nasdaq simultaneously, or on the GEM, followed by the Nasdaq.” The GEM, or Growth Enterprise Market, of the Hong Kong Stock Exchange has a strong high-tech flavor, making it similar to the Nasdaq.
Funds raised in an IPO of Dickson Cyber would be used to seed expansion of the Dickson Cyber concept into other Southeast Asian nations, as well as to provide Dickson Cyber’s shareholders with what Poon termed “a real market value for our cyber initiatives.” Also key, he said, is the potential for strategic alliances that would come with the unit’s stock-swap potential.
Action during the first five weeks in business for the Dickson Cyber Express mall in Hong Kong’s Kowloon railway station and the affiliated DicksonCyber.com e-tail site has been encouraging if not overwhelming, Poon related. “I think we had a very enthusiastic turnout and response to the opening of Dickson Cyber Express,” he said of the interactive mall and Web site that bowed on Sept. 16.
“Having said that, we’re in a very early stage. We’re having some teething problems,” he admitted. “We’ve had some time to sort out what’s selling well and what’s not; now we can adjust the merchandising.”
According to Poon, the areas of the mall “attracting the highest sales” so far are Entertainment World, which sells CDs, books, videos, DVDs; E-World, which offers audio, visual and computer hardware; and iCosmeticWorld, merchandising cosmetics, hair care, skin care and fragrance products as well as personal consultations. He declined to specify sales or customer traffic figures, citing the quiet period commanded by Dickson Cyber’s possible IPO.
Poon expects most of Dickson Cyber’s expansion to stem from the Web site, and from the growth of the unit’s third-party distribution network internationally, augmented by the opening of a handful of additional interactive shopping malls, perhaps in Shanghai for China, and London for Europe. But, Poon emphasized he does not want to dilute the impact of the Dickson Cyber Express mall by making it too common. Likely markets for the first extension of the e-commerce site beyond Hong Kong are Taiwan, Singapore, and Malaysia, with China perhaps to follow. Hong Kong has been a special administrative region of China since July 1, 1997.
“As of today, we are still looking to expand Dickson Cyber into other Southeast Asian countries in the first half of 2001,” Poon concluded, “and we are still on target to do so.”