Li&Fung announces divestment of Asia Consumer and Health Distribution Business
The Company has announced earlier that it was evaluating strategic alternativeswith respect to its Asia consumer and healthcare distribution businesses which were acquired by the Company through the privatization of Integrated Distribution Services Group Limited in 2010. Since their acquisition, these distribution businesses have been operated as part of the Group’s trading network, which is distinct from the Group’s logistics network. As these distribution businesses are not part of the core sourcing and logistics business of the Group, the Directors determined it is in the best interests of the Company to divest these businesses
The Company, and the Seller (a wholly owned subsidiary of the Company) have entered into the Sale and Purchase Agreement with Dah Chong Hong Holdings Limited (“DCH”) and Neosota Corp. (being a wholly owned subsidiary of DCH), in order to dispose of the Distribution Business, and for a cash consideration of USD 350 million (on a cash-free and debt-free basis, and is subject to closing adjustments).
The Directors are of the view that the divestment of the Distribution Business is part of the Group’s strategic objective to allow the Group to continue to focus its resources on its core trading and logistics business. This strategic transaction also has the added advantage of reinforcing the Group’s strong cash flow and solid balance sheet with increased flexibility in its capital structure.
Listing rules implications: As the highest applicable percentage ratio for the Company in respect of the divestment is 5 % or more, but is less than 25 %, the divestment constitutes a discloseable transaction for the Company, and it is subject to the announcement requirement under Chapter 14 of the Listing Rules.
Shareholders and potential investors of the Company should note that the Divestment is subject to a number of Conditions which may or may not be fulfilled.
Shareholders and potential investors of the Company are reminded to exercise caution when dealing in the securities of the Company.