Samsonite, the global luggage brand, faces stinging criticism from an activist investor that has accused the company of “questionable accounting” and “poor corporate governance”.
Blue Orca Capital (BOC) made the accusations against the Hong Kong-listed business in a research note that also claimed the brand’s stock was overpriced.
Shares in Samsonite were suspended yesterday after the BOC allegations were made public.
BOC called on the board to appoint an independent audit firm to examine transactions involving a joint venture, the company’s treatment of inventory, and purchase price accounting.
Texas-based BOC also alleges that Samsonite’s CEO Ramesh Tainwala has claimed to be a doctor when he is not.
Summing up in an aggressive report, BOC said: “Ultimately, we believe that Samsonite is simply carrying too much baggage to trade at such a high premium.”
Samsonite responded in a statement, saying the BOC allegations were “one-sided and misleading” and conclusions in the activist’s report were “incorrect”.
Samsonite’s chairman, Timothy Parker, said it was “important” for shareholders to be aware that the BOC report contained the “opinions of a short seller whose interests may not be aligned with those of shareholders in general…”
Parker urged shareholders to approach the BOC report with caution, and added support for the chief executive.
“I would like to ask our investors for their patience during this time and to thank them for their support.
“I have full confidence in Ramesh’s capabilities as CEO and in the broader management team.
“We intend to draw a line under this matter as quickly as possible and move on to focus on what is important: the future growth of our business.”
Samsonite was expected to apply for the suspension of its shares to be lifted Friday (25 May).
The company’s share price tumbled after BOC’s report became public. On M0nday the share price closed at HK$34.6. Yesterday (24 May) the shares closed at HK$30.7 and were trading at HK$26.8 as this article went to press.