Li Ning sells stake in Double Happiness
Sportswear maker and retailer Li Ning has sold a 10 per cent stake in the Double Happiness table tennis business to Viva China.
The deal is worth RMB 125 million in cash and will increase Li Ning’s net cash position by 25 per cent relative to the reported interim net cash position.
Li Ning says it expects an additional disposal gain in excess of RMB200 million, in part from the revaluation of the company’s remaining 47.5 per cent stake in Double Happiness.
“The net proceeds will be mainly used for investment in product development of the five core sports categories under Li-Ning brand and further expansion of the company’s distribution channels, and general corporate purposes,” the company said in a statement.
“The transaction increases transparency for investors with respect to Li Ning’s core business through the deconsolidation of Double Happiness. It will also allow the management of Li-Ning and Double Happiness brands to better focus on their respective businesses.”
After the settlement, Li Ning will remain the largest shareholder in Double Happiness, but will no longer have control of the business.
Terence Tsang, Li Ning’s CFO, said Double Happiness is one of the top performing brands for the company.
“This transaction will help unlock its embedded value and provide it with flexibility to develop its strategy. At the same time, Li Ning’s improved cash position will boost our liquidity further so that we are better positioned to capture any upcoming business opportunities in terms of product development and distribution channel expansion.”