Li & Fung, the large Hong Kong-based supply chain manager, is set to take over the Hang Ten Group, a major factor in the surf apparel market through its Hang Ten, H&T and Arnold Palmer brands. It has placed a conditional offer of 2.65 billion Hong Kong dollars (€260.9m-$340.5m) for the company through one of its subsidiaries, Perfect Lead Investments.
The offer values Hang Ten's shares at a 58.8 percent premium from their price on the Hong Kong Stock Exchange prior to their suspension last Friday. The deal is certain to go through as YGM Trading, AWSL and other shareholders holding more than 69 percent of Hang Ten's equity have already approved it. YGM Trading, which licenses Aquascutum and Guy Laroche in Asia, said it would make a capital gain of HK$340 million (€33.5m-$43.7m) through the sale of its 21.8 percent stake in Hang Ten.
For the six months ended Sept. 30, Hang Ten saw its operating income grow by 28 percent to HK$129.7 million (€12.8m-$16.7m) on 13 percent higher revenues of HK$1,175 million (€115.7m-$151.0m). Li & Fung however suffered a 16 percent slip in operating income to HK$338 million (€33.3m-$43.4m) on 33 percent higher revenues of HK$8,798 million (€866.2m-$1,130m).
Hang Ten, whose name stems from a specific surf maneuver, has its roots in California from the early 1960s, but its operating business is based in Hong Kong and the company is registered in Hamilton, Bermuda Islands. Its brands are mainly sold through about 790 stores all over Asia.
If completed, the acquisition of Hang Ten should help Li & Fung to improve its standing in the casual fashion retail business, notably in China, South Korea, Taiwan and various other countries in Southeast Asia. Li & Fung has acquired several other international brands recently, but mostly in the dressy fashion segment. The companies it has bought so far this year have an aggregate turnover of HK$1.2 billion (€118.1m-$154.2m).
The group is a global player in sourcing, distribution, logistics and trading for a wide variety of quality-oriented consumer goods. The company relies on some 240 offices around the globe and employs 27,000 people. Its sales reached the equivalent of about €15 billion in 2010.
