Reports that Hong Kong sourcing company Li & Fung is thinking of selling its distribution unit LF Asia have prompted its directors to issue a clarification through a statement to the stock exchange.
“The board wishes to advise that the company is evaluating strategic alternatives with respect to its Asia consumer and healthcare distribution businesses,” says the statement.
These businesses are a part of an acquisition by the company through the privatisation of Integrated Distribution Services Group in 2010.
The directors say the company is discussing a “possible transaction” with independent third parties, which by nature could be defined as an LF Asia sale.
“These discussions may or may not lead to entering into definitive and binding agreements,” says the statement, signed by Li & Fung and Kwok Lun Group chairman William Fung, by order of the board.
Li & Fung supplies clothes and toys to US retailers such as Wal-Mart Stores, according to Bloomberg, which tips a deal could value LF Asia at US$300 million to $400 million. LF Asia distributes consumer goods including Coty cosmetics, Procter & Gamble personal-care products and Sanofi medications.
According to its website, LF Asia, which competes with Zurich-based DKSH Holding, has more than 40 offices and distribution centres and sells products through a network of more than 30,000 retail outlets. Controlled by billionaire brothers Victor and William Fung, the company said in its latest earnings statement that the Asian distribution business was hit last year by China’s economic slowdown, geopolitical issues in Southeast Asia and the depreciation of Asian currencies against the US dollar.