Puma Acquires Local Partner Knowledge Fire's Stake In Joint Venture

Mergers & Acquisition

Puma Acquires Local Partner Knowledge Fire's Stake In Joint Venture

With the acquisition of the partner's 49% stake, Puma also inherits a network of about three dozen company owned outlets, a person aware of the development said.

Puma has bought out the entire stake of local partner Knowledge Fire and converted their joint venture Puma India Retail into a fully owned subsidiary of the German sportswear giant, weeks after receiving approval for a 100% single-brand entity in India. With the acquisition of the partner's 49% stake, Puma also inherits a network of about three dozen company owned outlets, according to reports.

Puma and rival Adidas had sought the government's permission in March to undertake a wider mix of retailing options, including wholesale, franchising, own stores and ecommerce, through fully owned entities, becoming the first among foreign companies to take advantage of changes that allowed single-brand overseas retailers to sell online as well as in India.

Puma Sports India, originally a wholesale company that sold products to franchisees, will now become the main entity that will carry out all the businesses of the German company. Puma's global sales increased 14% to US$ 3.4 billion in 2015 and revenue from Asia was boosted by higher demand for footwear, apparel and accessories from India and China.

"The approval allows Puma Sports India to carry out retail, wholesale and ecommerce through the same entity," said Abhishek Ganguly, managing director for Puma India. "This company has been in existence for the last 10 years, during which we would sell Puma products through third-party retail." Adidas India Marketing, the wholesale arm of Adidas AG, received government approval in July to undertake singlebrand and ecommerce businesses.

In November, the Department of Industrial Policy & Promotion eased norms to provide single-brand licence holders - FDI-funded companies allowed to sell products under a single label - multiple retailing options, including own stores, franchisees, wholesale retailing as well ecommerce, under one entity. "It has been decided that an entity which has been granted permission to undertake SBRT (single brand retail trading) will be permitted to undertake ecommerce activities," the department's policy paper said. The decision benefits global retailers including Tommy Hilfiger and Furla, whose single-brand applications were stuck with the department because they had planned to set up their own stores and sell products through franchisees, which wasn't allowed earlier. Last month, Tommy Hilfiger received approval for Tommy Hilfiger Arvind Fashion, a 50:50 joint venture between the US premium lifestyle brand and Ahmedabad-based Arvind, four years after applying.