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NEW YORK — Hong Kong-based Li & Fung Ltd. and Tommy Hilfiger said Sunday that a wholly owned subsidiary of Li & Fung will acquire Tommy Hilfiger's global sourcing operations, headquartered in Hong Kong, for $247.8 million in cash.
Expected to close by March 28, the transaction will provide Li & Fung with enhanced global diversification and enable Tommy Hilfiger to access a broader buying office network, the companies said in a joint statement.
Monetary figures have been converted to U.S. dollars.
Li & Fung said the purchase will be financed by its internal cash reserves and is payable on completion of the acquisition.
"Li & Fung has been on the lookout for acquisition opportunities that would further enhance its global diversification and maintain a much more balanced geographical mix of business. Our share placement executed last year has augmented our capacity for acquisitions and positioned us well to capture this opportunity," said William Fung, group managing director of Li & Fung, in the statement.
Hilfiger's existing buying offices in Hong Kong, Taiwan, India, Bangladesh and Sri Lanka will be integrated into the Li & Fung organization.
For the year ended March 31, 2006, sourcing volume was $703 million and the unaudited adjusted earnings after tax attributable to the Hilfiger sourcing operations was $31 million, according to the release.
Fred Gehring, chief executive officer of Tommy Hilfiger Group, said, "We believe that to take things forward, we can benefit tremendously from the integration of these offices within the greater network of Li & Fung, with over 70 offices in over 40 countries and territories, including as many as 19 offices in China alone. The continued dedication of our respective sourcing teams in combination with Li & Fung's tremendous strength in product development and overall buying power will be an important asset while we continue to develop our brand."