(Bloomberg) -- Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., is working on “plenty” of possible deals in the U.S. as the world’s biggest economy shows some signs of improving.
“We see a lot of opportunities in the U.S. right now to buy things that we’ve always wanted, at prices that we feel are very reasonable,” Company President Bruce Rockowitz said in a Bloomberg TV interview late yesterday. “The whole U.S. is in a bottoming out phase that’s going to last, probably till the end of this year, and then start to see a pickup into next year.”
Li & Fung yesterday announced plans to raise HK$2.7 billion ($348 million) selling new shares to fund purchases. Rockowitz is signing outsourcing deals and buying rivals, last month completing an agreement to supply Liz Claiborne Inc., whose brands include Kate Spade and Juicy Couture. Li & Fung made 62 percent of its HK$110.7 billion sales last year in the U.S.
Li & Fung rose as much as 2 percent to HK$22.50 in early trading in Hong Kong. It was trading at HK$21.80 by 11:04 a.m. local time. The company said it will sell shares at a price of HK$22.55 each, 6 percent lower than the May 4 closing price.
The share sale “will further strengthen Li & Fung’s existing liquidity position and equity base,” Elizabeth Allen, a vice president at Moody’s Investors Service, said in a statement late yesterday. The share placement “will have no immediate impact” on the company’s A3 ratings, Moody’s said.
Li & Fung, which also supplies Inditex SA’s Zara chain and Gap Inc., is eyeing “acquisitions and some major outsourcing deals” as prices of assets have fallen globally, Rockowitz said. The company also has plans for acquisitions in Asia, he added.
The agreement to acquire Liz Claiborne’s sourcing business may boost sales by $1 billion, the company has said.
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