Hong-Kong-based conglomerate Dah Chong Hong Holdings Ltd (DCH) (SEHK: 1828) agreed to acquire the LF Asia consumer and healthcare distribution business from Hong Kong-based Li & Fung Ltd (SEHK: 494), for US$350 million. The deal is expected to close by the end of June 2016.
DCH, a majority-owned subsidiary of CITIC Ltd (HK: 267), is an integrated trading and distribution company operating in Asia with a focus on Greater China, supported by an extensive logistics network.
LF Asia Distribution is a regional leader in the distribution of consumer and healthcare products across Asia.
Li & Fung, the sourcing company that supplies clothes and toys to U.S. retailers such as Wal-Mart, had acquired the LF Asia Distribution business through the privatization of Integrated Distribution Services Group Ltd, in 2010.
The divestment move is part of Li & Fung’s strategy of simplifying its overall business to drive organic growth, allowing the company to focus on its core businesses of trading and logistics, the company says.
“We are very pleased to welcome LF Asia Distribution’s world-class people and experienced management team to DCH,” said Zhang Jijing, chairman of DCH. “Its business is highly complementary to our own and we look forward to working together as we grow our combined businesses.”
“We are very pleased to have reached this agreement with DCH,” said William Fung, group chairman of Li & Fung. “LF Asia Distribution has more than 40 years’ history and ranks amongst the leading consumer and healthcare distributors in Greater China and Southeast Asia.”
LF Asia Distribution will continue to operate as a separate, independent entity for the first year after the deal closes, and its employees will become employees of DCH.
The deal does not cover Li & Fung’s Logistics and Beauty businesses.
Dah Chong Hong Holdings Limited is a Hong Kong-based conglomerate with diversified business portfolio in: Motor and Motor Related Business, as well as Food and Consumer Products Business which are supported by its logistics services. The company was founded in 1949. In 1992, it became a wholly owned subsidiary of CITIC Pacific. DCH was listed on the Hong Kong Stock Exchange in 2007. The DCH group has business operations in mainland China, Hong Kong, Macao, Taiwan, Singapore, Japan and Myanmar.
Li & Fung Ltd, an investment holding company, engages in the design, development, sourcing, and logistics of consumer goods for various retailers and brands worldwide. The company operates through two segments, Trading Network and Logistics Network. It offers designer apparel, home decor and furnishings, children’s clothing, handbags and accessories, toys, sporting goods, and footwear, as well as health and beauty products. The company’s logistics services comprise warehousing, transport, repacking, customs brokerage, freight forwarding, hubbing and consolidation, and other value-added services.
The company serves department stores, specialty stores, clubs, hypermarkets, and e-commerce customers. It manages the supply chain for retailers and brands through a network of approximately 300 offices and distribution centers, and approximately 15,000 suppliers. The company has over 25,000 employees. Li & Fung was founded in 1906 and is headquartered in Kowloon, Hong Kong.