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Sourcing group Li & Fung to sell off three business verticals for $1.1bn

Hong Kong sourcing group Li & Fung is selling off three of its business verticals to Hony Capital and the Fung Group for around $1.1bn. The deal wi...

James Henderson
|Dec 15|magazine6 min read

Hong Kong sourcing group Li & Fung is selling off three of its business verticals to Hony Capital and the Fung Group for around $1.1bn.

The deal will see the business, which helps the likes of Walmart source products across their supply chains, sell of its off its sweater, furniture and beauty products businesses.

The product verticals were created in 2015 to consolidate some of the trading businesses of Li & Fung in specific product areas of furniture, sweaters and beauty.

The group said that further growth in these product categories necessitates expansion upstream and downstream, requiring capital investment and management attention, which the company believes is best achieved outside of Li & Fung and its present strategic direction.

This transaction continues Li & Fung’s strategy of simplifying its overall business and allows its senior management team to focus resources on its ‘Three-Year Plan’ goal of creating the supply chain of the future to enable Li & Fung to deliver long-term shareholder value as it transforms into a digital company.

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Spencer Fung, Group CEO of Li & Fung, said: “The strategic divestment of the product verticals allows Li & Fung to focus on its core competencies and further strengthens our capital structure.

“The $1.1bn proceeds will allow us to pay a generous dividend to our shareholders and the remaining $580mn of cash will give us more financial flexibility as we continue to execute our Three-Year Plan goal of building an end-to-end digital supply chain.

“Our 1H results were solid and our customers and vendor partners are responding very positively to our new digital solutions. We are very excited to be creating a future supply chain that does not yet exist in the market.”