Hong Kong sourcing company Li & Fung, which supplies clothing and toys to such US retailers as Wal-Mart Stores, has agreed to sell its distribution unit LF Asia to Dah Chong Hong Holdings (DCH).
Li & Fung says the proceeds from the deal, about US$350 million, will be used for working capital and for strengthening its capital structure, enabling it to simplify its businesses and focus on trading and logistics.
Expected to close by the end of June, the deal was indicated last month, when its directors issued a clarification through a statement to the stock exchange. Also last month, Li & Fung sold its 26 per cent holding in Indian logistics company Future Supply Chain Solutions.
DCH, a cars to food and logistics giant that is a majority-owned subsidiary of Chinese conglomerate Citic, says the acquisition of LF Asia will expand its own consumer business and create a better balance between its motor and consumer products. LF Asia distributes consumer and healthcare products across Asia.