Li & Fung to foray into health & beauty business

15 Jun '07

2 min read

Hong Kong-based global consumer goods exporter Li & Fung Limited announced that it has entered into an agreement to acquire the shares of CGroup, a Hong Kong based international health, beauty and cosmetics (HBC) supply chain company.

Mr. William Fung, Group Managing Director of Li & Fung Limited, said, “We have been on the lookout for opportunities that would provide a platform for a new source of long term growth and product diversification."

"This first foray into HBC business will be a great complement to our existing hardgoods and softgoods businesses and we see tremendous opportunities to leverage potential synergies with our existing customers. Our bond issuance in May has given us a war chest to capture opportunities like this.”

The purchase consideration is approximately US$120 million, with two contingent amounts of up to a total of US$80 million payable if certain profit targets are met. The consideration will be satisfied in cash and by the issue of new shares of the Company.

CGroup is one of the world's premier companies in the global HBC supply chain business. Through its Hong Kong head office, Hong Kong and China production offices and strong sales and marketing offices in New York and Paris, CGroup co-ordinates and manages the supply of HBC products to premier cosmetics brands and retailers globally.

The profit before and after tax and extraordinary items of CGroup for the year ended 31 December 2006 based on unaudited combined accounts after adjustment of non-recurring items were approximately HK$90.6 million (US$11.6 million) and HK$73.3 million (US$9.4 million) respectively. Sales for 2006 were approximately US$120 million.

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