Lux Group owner Ron Shemesh has told kbbreview that he feels that he was ‘induced’ into spending millions on due diligence and legal fees in his failed bid to buy Poggenpohl.
In an explosive interview with kbbreview, Shemesh says that Chinese bathroom giant Jomoo gazumped him to win the German kitchen company at the last minute despite, he alleges, having already been dismissed as a bidder.
He also says he believes the Jomoo deal is part of a wider business ‘Cold War’ which is seeing Chinese companies buy up industry in the West using state-funded ‘sleight of hand’.
There is, he says, “emerging mass resistance” to the Jomoo purchase of Poggenpohl and the company will “endure massive losses” if the deal is ratified by German authorities.
“We believe that we are the ‘contract vendee’ and we were induced into spending millions of Euros on due diligence and legal fees to develop final contract documents,” Shemesh said. “We were ready to close the deal as per the binding offer that was, without doubt, accepted.”
Shemesh does now concede, however, that his pursuit of Poggenpohl is almost certainly over.
“Unless the German authorities step in and overturn the Jomoo deal, it would seem that Poggenpohl is destined for Chinese ownership and we must move on to new projects.”
The Lux deal got to the point that it had been approved by the creditors committee and the German administrator Manuel Sack. partner at the German law firm Brinkmann & Partner, cooperated in a joint press statement declaring them as the new owner. It did, however, note that the final contract had yet to be signed.
Shemesh said that, as of June 26, Lux Group was managing the cash flow of Poggenpohl GMBH as he had agreed to take on the losses from July 1. He also alleges that Jomoo was rejected as a bidder early on in the process despite, he believes, having submitted the highest offer.
In a statement to kbbreview this week Sack said: “The investor process for Poggenpohl, as managed by PWC, was fair and transparent”.
Kbbreview has also asked for comment from Jomoo and PWC.
Shemesh now says that he believes there is “resistance” from Poggenpohl dealers around the world. “[They] were quite keen to buy a refreshed Poggenpohl ‘German’ brand and not a ‘Chinese’ product. The association with China and the Chinese Communist Party is especially painful for dealers in India, Hong Kong and Taiwan who refuse to deal with Chinese owners.”
“If Jomoo is given permission to conclude the deal, I predict they will endure massive losses as they will have inherited large operational costs in an increasingly weak and complex market” he said. “Clients who have many choices will move to other German brands. It has already become apparent that orders in the Poggenpohl pipeline are getting cancelled for a multiplicity of reasons. The market is in turmoil due to covid-19 and most stores are loss making in any case – so there are headwinds for all of us in retail.”
When Lux Group announced what they believed was their acquisition of Poggenpohl, Shemesh said it was the start of a revolution that would ‘transform the kitchen industry like Tesla did in the automotive industry” and that there would be a €50m investment in the brand.
The purchase was to be a joint venture between Lux Group and tech entrepreneur Wolf Family Office.
When the surprise Jomoo deal was announced, Xiaowei Lin, general manager of Jomoo Germany said: “As a critical part of Jomoo’s long term sustainable market and product strategy, we value the need to cover well the high end and premium market segment. We have seriously considered the opportunity to work with or acquire an established brand with high quality and design reputation for a while. Such a brand should preferably have a long-standing history, well-known around the world and be well respected with a reputation for craftsmanship and excellence. Poggenpohl meets such criteria and fits nicely into Jomoo’s market strategy in expanding its kitchen ware and cabinet offering.”
The Lux Group acquired Smallbone of Devizes and Mark Wilkinson in 2018. In 2019 the group continued with McCarron and launched Brookmans by Smallbone. It recently announced the opening of a spectacular new £15m flagship Smallbone showroom in Knightsbridge.