[HONG KONG] Global exporter Li & Fung is selling its Asia consumer and healthcare distribution business to motor vehicle distributor Dah Chong Hong Holdings for US$350 million in cash, as it refocuses on core trading and logistics operations.
The supplier to US retailers including Wal-Mart and Kohl's Corp is selling the LF Asia Distribution business to Dah Chong in a deal that is expected to close by the end of June, Li & Fung said on Tuesday. The deal does not cover Li & Fung's logistics and beauty businesses.
The LF Asia Distribution business came into Li & Fung's fold when it bought Integrated Distribution Services Group in 2010. The Hong Kong-based group has changed its strategy since 2014 to focus on its core asset-light supply-chain business.
For Dah Chong Hong, the deal represents expansion of its consumer-focused operations.
"The company believes that the acquisition will expand the company's consumer business, creating a better balance between motor and consumer products," Dah Chong Hong Chairman Zhang Jijing said in a statement, adding the enlarged consumer products portfolio will boast a broad range of food, personal care and healthcare brands.
Li & Fung had said in April it was in talks with independent third parties regarding a "possible transaction" involving the consumer and healthcare distribution business.
Li & Fung shares fell 1.3 per cent on Tuesday, while Dah Chong Hong stocks rose 2.2 per cent. The moves compared to a 1.9 per cent fall in the benchmark Hang Seng Index.