Hillhouse, CDH-led group offers to buy Belle International in $6.8 bln deal

Elzio Barreto and Donny Kwok

* Hillhouse, CDH-led group offers HK$6.30/share in Belle

* Hillhouse to own 56.8 pct of Belle after buyout

* Belle has faced tough competition from e-commerce

* Privatisation to free Belle from "short-term

distractions-CEO

(Adds Belle CEO comments, details on Hillhouse, Belle ownership

after buyout)

HONG KONG, April 28 (Reuters) - A consortium led by private

equity firms Hillhouse Capital Group and CDH Investments offered

on Friday to buy Belle International Holdings Ltd in a

deal valuing the entire Hong Kong-listed shoe retailer at about

$6.8 billion.

The move follows a similar transaction in January, when

e-commerce giant Alibaba Group Holding Ltd led a $2.6

billion bid to privatise department store operator Intime Retail

Group Co Ltd, underscoring the difficulties

traditional retailers are facing from competition with online

rivals.

Belle, which distributes several sportswear brands including

Nike, Adidas, Puma and Converse,

said in a securities filing it has experienced "unprecedented

challenges," particularly from e-commerce and shopping malls

that compete with its main sales channels in department stores.

"A fundamental transformation is necessary in order for the

company to compete effectively and solidify its long-term

leadership in the Chinese ladies footwear market," CEO Sheng

Baijiao said in the filing.

Hillhouse and CDH joined with Yu Wu and Sheng Fang,

directors at Belle, to offer HK$6.30 per share in the company.

The price is equivalent to a premium of 20 percent from Belle's

closing price before the trading halt and values the company at

HK$53.1 billion ($6.8 billion).

Hillhouse, which has invested in major Chinese internet

companies including Baidu Inc, Tencent Holdings Ltd

and ride-hailing firm Didi Chuxing, will end up owning

56.8 percent of Belle after the deal is completed, with CDH

taking a 12.1 percent stake, according to the filing.

A group of Belle's management, including Yu and Sheng, will

own the remainder 31.1 percent of the company.

Bank of America advised the buying consortium and will

extend HK$28 billion ($3.60 billion) in acquisition financing to

the group to help fund the share purchase.

Chief Executive Sheng and Belle's chairman Tang Yiu have

accepted the offer for their combined 25.8 percent stake.

Sheng said the transformation can be more effectively

implemented if the company is privatised and free from

"short-term distractions arising from the public equities" as it

also involves risks.

Trading of Belle's shares has been halted since April 18 at

the company's request and will resume on Tuesday, after a public

holiday in Hong Kong.

Shares of Belle, which has a market value of $5.7 billion,

gained nearly 21 percent so far this year, reversing a 25

percent slide in 2016.

China's top footwear retailer, which has over 20,000

mainland outlets, had warned in March that it expected to see a

15-25 percent fall in profit when it reports full-year earnings

in May as shifting consumer style preferences put pressure on

its shoe business.

Belle also said adjustments to its share award scheme as

part of an incentive programme to management had led to a

significant increase in expenses.

($1 = 7.7778 Hong Kong dollars)

(Reporting by Elzio Barreto; Editing by Nick Macfie/Keith Weir)