Founding family bids US$930m to privatise Li & Fung

The board of directors has received a proposal to privatise Li & Fung

Global sourcing and logistics giant Li & Fung[1] has received an offer worth US£930.7m to take the company private by a group controlled by the founding Fung family. The move comes as the Hong-Kong based supply chain solutions provider is being buffeted by the US-China trade war and the global coronavirus pandemic.

The offer is priced HK1.25 (US£0.16) per share and comes from Golden Lincoln Holdings, whose shareholders consist of the Fung family – the founders and controlling shareholder of Li & Fung – and GLP Pte Limited (GLP), a global logistics warehouse operator and investor, headquartered in Singapore. Golden Lincoln Holdings is ultimately controlled by the Fung family holding 60% of voting shares, with GLP holding the remaining 40% of voting shares, and 100% of non-voting shares, resulting in GLP having effective economic ownership of 67.67%.

Li & Fung today (20 March) reported a 10.1% drop in full year revenue to £11.4bn, while core operating profit fell by 22.9% to £228m. Net profit attributable to shareholders for the year ended 31 December 2019 was US£17m, representing a return to profitability, but adjusted profit attributable to shareholders tumbled by 43.9% to £74m.  The company blamed the drop in turnover on continued destocking by customers, store closures and customer bankruptcies, as well as the company exiting a number of higher-risk and non-strategic customers. Total margin percentage improved 0.1 percentage points to 10.7%, mainly due to the contribution from the higher-margin logistics business, whose turnover increased 3.5% to £1.2bn and core operating profit rose 1% to £94m.

Commenting on how the Covid-19 outbreak is affecting global supply chains, Spencer Fung, group CEO of Li & Fung, said: “We are working around-the-clock with our customers and suppliers during this period of deep uncertainty. Our teams on the ground across the world are actively supporting customers, just as we did during the US-China trade war to help address the disruptions to their business.” Looking ahead, the said its goal to create the ‘Supply Chain of the Future’ remains more relevant than ever given the “continued exponential technological change” taking place in the retail industry.

It added that the strength of its global sourcing and production footprint has helped reduce the effects from these disruptions on its customers.

“We will further elevate our sense of urgency towards execution and agility in all that we do,” added group president, Joseph Phi. “Whether it is responding to a customer request, introducing process improvements, or pivoting our strategy, we are focusing on what we call ‘the urgency of now’ to make things happen faster and more efficiently.”

References

  1. ^ Li & Fung (www.just-style.com)

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