GUADALAJARA, Mexico — UBM is in talks to fully or partially acquire Mexico’s leading textiles and apparel fair Intermoda Fashion Group SA and could close the deal in September, one of the fair’s five owners told WWD.
“We are in talks and exploring three options with them, a partial or full sale, a 50/50 joint venture company or a marketing alliance,” said the shareholder, who requested anonymity because the talks are private.
UBM declined comment, while Reed and Messe Frankfurt did not respond to requests for comment.
The shareholder’s comments followed a report in Mexican newspaper El Informador, quoting Intermoda president and shareholder Hector Reyes Camarena that the fair has received acquisition offers from three unnamed bidders.” The other four shareholders are Jorge Castellanos, Jaime Barba, Cuauhtemoc Rivas and Mario Flores. The apparel industry veterans own 20 percent each of the show organizer.
The shareholder belonging to this group revealed the offers have come from UBM, Reed Exhibitions and Messe Frankfurt. However, he noted UBM has so far expressed the greatest interest, with the global events firm expected to complete due diligence in 10 days.
“They have been doing this for over a month,” the shareholder continued. “Depending on what they offer us and what we counter with, we hope to finalize a deal in about two months.”
UBM is said to have sent executives from its UBM Advanstar fashion division to conduct the due diligence in Guadalajara, Mexico’s second-largest city.
The shareholder said Intermoda’s five owners favor a 50/50 joint venture over an outright sale, though all options are being reviewed. He would not say why the owners are exploring the sale but noted a joint venture would help internationalize Intermoda and boost its annual revenues, currently hovering at $5.2 million to $6.5 million. This is based on $2,000 to $2,500 average stand prices and 1,300 such spaces rented for in each biannual edition. Sources said the five owners split roughly 50 million pesos, or $3.1 million, in annual net profits.
UBM and its Magic Trade Show “could bring so many international buyers,” the shareholder said in an interview during Intermoda’s 63rd edition, which ends Friday. “Right now we have 300 buyers per event. We’d like that to be 10,000 to 15,000.”
Exhibitors would also increase to around 2,000 per edition, helping the fair occupy 20,000 square meters of idle space.
Intermoda, which has been running for 30 years, has been struggling to diversify its offer beyond apparel sourcing. It has gradually added raw-material suppliers, though these currently account for just 10 percent of the business.
“They have moved to diversify the offer, to introduce textiles and technology, machine suppliers, accessories and footwear,” said Arturo Rodriguez, a consultant with TC2.
However, he noted most buyers remain owners of small boutiques or regional retail chains supplying the low to middle-class Mexican market
Big Mexican department-store buyers such as Liverpool, El Palacio de Hierro or even retailers like Wal-Mart no longer attend, preferring to strike individual sourcing contracts, sources said.
Despite adding a cluster for emerging talent called Designers’ Corner, the fair still lacks the excitement or tight integration that Latin American rivals such as Colombiamoda in Colombia have brought to the fore.
“It’s a good fair but it needs more creativity and innovation,” said Juan Falcon, an independent buyer with clients such as C&A. “Organizers have to work harder to get more people to come in.”
Yet the owners are not losing hope the event can do better, especially with a joint venture that would likely bring a cash injection.
“If we get more buyers, we can get more exhibitors and grow the business,” the shareholder said. “And if those are also exporters, that would be amazing for our industry and generate more employment for Mexico.”
The shareholder said UBM, Reed and Messe Frankfurt approached the owners earlier this year to explore growth opportunities in Mexico, which has a big, relatively healthy economy and a greater openness to foreign investment, following a string of structural reforms liberalizing the oil, energy and telecoms sector.