Hong Kong-based sourcing group Li & Fung has entered into a sale and purchase agreement with the Hony Capital, one of China’s biggest private equity firms as it unveiled its divestment plans.
Li & Fung has decided to sell its sweaters, furniture and beauty businesses to Hony Capital. The company noted a revenue worth US $ 1.87 billion from these verticals during the year concluded September 30, 2017. The transaction is expected to get final shape in the first half of 2018.
As a result of the Strategic Divestment, the Group is expected to recognise a loss of approximately US $ 610 million attributable to discontinued operations, which include a write-down of goodwill attributable to the Target Group’s acquisitions in prior years. Li & Fung noted an increase of 6.1 per cent in net profit US $ 91 million for the January to June 2017 period from US $ 86 million in the same period last year.
The divestment is a continuation of the company’s plan to simplify its business following the spin-off of Global Brands Group Holding Limited in 2014 and the divestment of the consumer and healthcare distribution business of LF Asia in 2016. The company will continue to focus on developing its core competencies and building the supply chain of the future.