China’s online discount retailer Vipshop has acquired a 75 per cent stake in Lefeng.com.
Lefeng owns and operates an online retail business which specialises in selling cosmetics and fashion products in China.
Vipshop will pay US$132.5 million to acquire the controlling stake and Ovation Entertainment will own the remaining 25 per cent.
In connection with the acquisition, Vipshop entered into a framework supply agreement with the PRC affiliates of Lefeng and Ovation. Ovation will supply cosmetics, apparel and other consumer products developed under Ovation’s proprietary brands to Vipshop for retail through vip.com and lefeng.com while Vipshop undertakes to achieve at least 900 million yuan ($148.3 million) of sales of Ovation products in 2014 and has a right to receive progressive commissions based on the sales volume.
“The acquisition of Lefeng supports our goals of diversifying our product offerings, expanding our customer reach and further enhancing our customers’ experience,” said Eric Shen, chairman and CEO of Vipshop.
“With this addition to the Vipshop platform, we will be able to immediately augment our cosmetics offering, further expanding upon our leadership in China’s discount retail market.”