CHINESE conglomerate Fosun International announced a takeover bid for troubled German clothing retailer Tom Tailor on Tuesday, further expanding its reach into Europe’s fashion sector.

Shares in Tom Tailor surged 14 percent after the company said Fosun was increasing its shareholding to 35.35 percent. That will lift Fosun’s stake above the 30 percent threshold that triggers a mandatory takeover offer under German law.

The capital increase will raise 8.6 million euros (US$9.7 million), the companies said, and an offer price of 2.26 euros per share would give Tom Tailor a total value of 96 million euros.

Fosun, which owns French leisure company Club Med, has been expanding in Europe’s retail sector at a time when consumers in China are driving growth in luxury goods spending. Last year it took control of Lanvin, France’s oldest surviving couture label, and Austria-based luxury lingerie and legwear brand Wolford. It also has a stake in Italian high-end menswear label Caruso.

Hamburg-based Tom Tailor, founded in 1962, operates in the mid-range segment of the clothing market but has been struggling with tough conditions as consumers increasingly shop for shoes and clothes online.

Its shares have lost over 80 percent of their value since hitting a high of 12.9 euros in January last year.

Last month, fellow German women’s fashion retailer Gerry Weber filed for bankruptcy following failed talks with financing partners.

Tom Tailor’s chief executive officer Heiko Schaefer said the capital increase, due to take place Feb. 22, was a vote of confidence in the firm’s restructuring plans at its struggling subsidiary Bonita, which sells women’s fashion.

Fosun has gradually increased its stake in Tom Tailor since first buying into the company in 2014. In 2015, Fosun also took over German private bank Hauck & Aufhaeuser Privatbankiers for 210 million euros.(SD-Agencies)