Li & Fung said to weigh sale of US$400 million distribution unit

[HONG KONG] Li & Fung Ltd, the Hong Kong sourcing company that supplies clothes and toys to US retailers like Wal-Mart Stores Inc, is considering a sale of its distribution unit LF Asia, people with knowledge of the matter said.

Li & Fung has been talking with potential buyers for the business, which distributes consumer and health-care products in greater China and Southeast Asia, one of the people said. A deal could value LF Asia at US$300 million to $400 million, according to the people, who asked not to be identified because the information is private.

The unit being sold represents Li & Fung's remaining distribution business after it spun off Global Brands Group Holding Ltd, which licenses brands like Juicy Couture and Jones New York, as a separate listed company in July 2014. LF Asia distributes consumer goods including Coty Inc cosmetics, Procter & Gamble Co personal-care products and Sanofi medications.

A sale of LF Asia would allow Li & Fung to focus on its main business of providing sourcing and logistics services to global retailers, one of the people said. LF Asia, which competes with Zurich-based DKSH Holding AG, has more than 40 offices and distribution centers and sells products through a network of more than 30,000 retail outlets, according to its website.

Li & Fung hasn't made a final decision on the sale, and there's no certainty the deliberations will result in a deal, according to the people. A spokeswoman for Li & Fung said she couldn't immediately comment.

Shares of Li & Fung have fallen 9.5 per cent this year, giving it a market value of about US$5.2 billion. The company, controlled by billionaire brothers Victor and William Fung, said in its latest earnings statement the Asian distribution business suffered last year from China's economic slowdown, geopolitical issues in Southeast Asia and Asian currencies' depreciation against the US dollar.

BLOOMBERG