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Wal-Mart Supplier Li & Fung Offers $901 Million for Distribution Company By Wendy Leung and Cathy Chan - Aug 12, 2010 1:05 PM GMT+0200 Email Share Business Exchange Twitter Delicious Digg Facebook LinkedIn Newsvine Propeller Yahoo! Buzz Print Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., is offering about HK$7 billion ($901 million) to buy out a distribution company, gaining a network in China. The outsourcer will offer HK$21, or 0.585 of its stock, for each share in Integrated Distribution Services Group Ltd., according to a statement to Hong Kong’s stock exchange. The cash portion of the offer represents a 36 percent premium over Integrated Distribution Services’ closing share price on Aug. 9, before it was halted from trading. After the transaction, Li & Fung may derive 12 percent of its revenue from China and Southeast Asia, according to a company presentation. Asia contributed about 2 percent of sales last year. Li & Fung’s profit in the first half of this year surged 55 percent to HK$2.17 billion, beating analysts’ estimates. “It’s a strategic move to increase Li & Fung’s capabilities to provide logistics services and distribution into Asia for its clients,” said Matthew Marsden, a Hong Kong-based analyst at Samsung Securities Co. “By increasing sourcing and distribution capabilities in Asia, through integrating IDS into their operations, Li & Fung would be enabled to offer large clients like Wal-Mart help in increasing distribution in Asia.” The Hong Kong-based company has been acquiring rivals and signing supply agreements to help meet a sales target of $20 billion this year. ‘Best Available Platform’ Li & Fung last traded at HK$37.70 on Aug. 9, before it was halted from trading. Integrated Distribution Network, which is also halted, closed at HK$15.42 on Aug. 9. Both companies’ shares resume trading tomorrow. The distributor “provides the best available platform to replicate in Asia, and China in particular, Li & Fung’s success achieved in wholesaling in the United States and in Europe,” according to the joint statement issued by the two companies. Parent Li & Fung Group and the Fung family, who together own about 45 percent of Integrated Distribution Services, have elected to be paid in stock. The maximum cash outlay for the deal will be HK$4.38 billion, Li & Fung said. JPMorgan Chase & Co. is Li & Fung’s adviser for the transaction and BNP Paribas is advising independent shareholders, according to the statement to the stock exchange. Earnings Beat Estimates “Acquisitions are the speediest way for Li & Fung to boost sales,” said Renee Tai, vice president for research at CIMB-GK Securities HK Ltd. Tai has a “neutral” rating on the stock. “It remains to be seen how much value-add the assets can bring to Li & Fung and the company has continued to rein in costs.” Li & Fung’s first-half net income of HK$2.17 billion beat the mean estimate of HK$1.93 billion in a Bloomberg News survey of four analysts. Earnings per share in the six months ended June rose to 56.9 cents a share from 38.1 cents a year ago, with sales gaining 12 percent to HK$51.8 billion. Li & Fung has increased first-half profit for 15 consecutive years, acquiring rivals and supplying U.S., European and Japanese retailers with the Chinese clothes, toys and furniture. The company, with about $1.2 billion in acquisition funds, is considering “a number of deals,” President Bruce Rockowitz said in Hong Kong today. There are “still a number of deals we are looking at,” he said. “Many acquisition opportunities are in the market.” He said the company “won’t go back and forth” on the offer price for Integrated Distribution Services. “It’s a firm offer.” To contact the reporter on this story: Wendy Leung in Hong Kong at wleung12@bloomberg.net Email Share Business Exchange Twitter Delicious Digg Facebook LinkedIn Newsvine Propeller Yahoo! Buzz Print Related News Asia · Retail · China Sponsored Links |
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| aus der Diskussion: | Starker Rebound Li +Fung/ IPO Tochter |
| Autor (Datum des Eintrages): | binda (12.08.10 13:51:19) |
| Beitrag: | 23 von 28 (ID:39973582) |
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