No money or machinery has been seen in over two years: what could have been a happy marriage is already a divorce. Bagir Group, Israel-based company of men fashion, cancels the deal signed in 2017 and files a lawsuit against Shandong Ruyi. The textile group had acquired the nickname of “Chinese LVMH” after the acquisition campaign that brought Bally, SMCP and Aquasanctum under its ownership.
No money and no machinery
At the start, it should have been an M&A operation that would allow both entities to take flight. With a 16.5 million USD investment, the Chinese textile group (which became a luxury conglomerate over the years), bought 53.7% of Bagir. After two years from the deal, Shandong Ruyi is late with the investments: only 3.3 million USD have been paid, according to Bagir.
Delays and missed promises
As summarized by just-style.com, Shandong Ruyi has asked to delay operations multiple times over the last two years. The last delay of the closing for the two “partners” took place in June 2019. The condition was imposed due to the fact that, the Chinese group was supposed to deliver machinery worth 1.3 million USD before September, in order to actually take ownership of the agreed-upon stake. Bargir would have utilized the machinery for its new site in Ethiopia. Shandong Ruyi missed this deadline as well, and the whole operation exploded.
“It’s a large disappointment for us to have to take legal actions against Shandong Ruyi, but we were left no alternative”, is the comment made by Micha Ronen, CEO of Bargir, to the press.
This is just another hit for Shandong Ruyi. The Holding’s liquidity problems, generated from the disruptive acquisition season during which a number of European luxury brands were bought, have received much attention in the press. The first instance was that of declared insolvency issue, to pay back a textile supplier. Now this: two clues may very well be proof. And not in favor of the Chinese.