By Isabella Steger
AFP/Getty Images
Hong Kong-based private-equity firm AID Partners agreed to buy music retail chain HMV’s Hong Kong and Singapore businesses, even as the industry continues to struggle from a consumer shift toward online shopping and digital downloads.
“The brand is one of the key reasons we wanted to do this deal. We want to revitalize it,” said Kelvin Wu, principal partner of AID Partners.
AID Partners would also acquire all of HMV’s licenses for mainland China, Macau and Taiwan, it said in a statement Thursday, without disclosing the terms of the deal.
HMV’s businesses in Asia are a separate legal entity to HMV Group PLC, which entered administration last month.
HMV’s Hong Kong and Singapore operations generate more than 300 million Hong Kong dollars (US$38.7 million) in annual turnover through six stores in the territory and two in Singapore, according to the statement. HMV also operates an e-commerce site in Hong Kong.
Emily Butt, managing director of HMV Hong Kong and Singapore, said sales of compact discs at its stores have fallen by less than 1% since the launch of Apple Inc.’s (AAPL) iTunes store in Asia last year. However, the mix of sales in its physical stores has changed over the last few years to reflect declining demand for music. CDs now make up 29% of HMV’s store sales, while digital video discs make up more than 40%, with the rest coming from sales of equipment such
as headphones and music players.
“The retail store here hasn’t deteriorated as quickly as in America, where you almost can’t find a CD or a DVD store anymore,” said Ms. Butt, adding the biggest issue for the retailer in Hong Kong is rent.
AID Partners focuses on media- and consumer-related investments in Greater China. It is currently invested in Legendary Entertainment, a movie production company, but has exited its investment in Orange Sky Golden Harvest
Entertainment, a movie theatre operator in Asia.
Earlier this month, HMV PLC’s administrator Deloitte said it will close 66 of the British video and music retailer’s 220 stores, which would affect 930 employees.
Hong Kong PE Firm Buys HMV"s Hong Kong, Singapore Businesses - Wall Street Journal
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