Li & Fung Company makes offer for Hang Ten

Li & Fung Comp, owned by the Fung family, which controls blue-chip trading firm Li & Fung Ltd., is offering to buy apparel firm Hang Ten Group Holdings Ltd. for US$340.7 million (Rs 1,844 crores). Hang Ten had its origins in surf wear now makes

mass-market casual clothing to sell mainly  in Taiwan and South Korea.

Perfect Lead Investments Ltd. is offering HK$2.70 (35 U.S. cents) in cash for each of Hang Ten's 982.3 million shares, which represents a 59% premium over their last closing price of HK$1.70, according to a joint announcement made by the firms late Monday. Citigroup advised Perfect Lead on the deal, and is providing a committed loan on to help finance this acquisition, a person familiar with the situation said.

Shares of Hang Ten, which were suspended from trading Friday pending the release of this announcement, were set to resume trade on Tuesday, upping 56% during afternoon trade, the biggest gain since listing in 2003, to HK$2.65 while Hong Kong's benchmark Hang Seng Index closed up by 0.2%.

Hong Kong-listed YGM Trading Ltd., which owns the Michel Rene and Guy Laroche clothing brands, and Taiwan's Kung family have already agreed to sell 69% of the company to Perfect Lead, the statement said.

The companies said the offer isn't related to any of the Fung family's publicly listed entities, such as Li & Fung, which sources products for U.S. companies such as Wal-Mart, high-end menswear retailer Trinity Ltd. and Convenience Retail Asia Ltd., which runs Circle K convenience stores.
Li & Fung has a long history of buying retail brands, recalls the Wall Street Journal,  announcing in August the acquisitions of Fishman & Tobin, a children's apparel company, and Crimzon Rose, a fashion costume jewelry and accessories company, as well as a U.S. distribution agreement with Liz Claiborne Inc.

Li & Fung has been battling a sluggish economic recovery in the U.S. and Europe, which together contributed 80% of the company's revenue in the first half of 2011, as well as increasing labor costs in China and rising commodity prices. Shares of the company have fallen 36% so far this year compared with the Hong Kong index's 21% decline. Li & Fung's shares were up 0.7% at HK$14.36 Tuesday afternoon.

Li & Fung has been battling a sluggish economic recovery in the U.S. and Europe, which together contributed 80% of the company's revenue in the first half of 2011, as well as increasing labor costs in China and rising commodity prices. Shares of the company have fallen 36% so far this year compared with the Hong Kong index's 21% decline. Li & Fung's shares were up 0.7% at HK$14.36 Tuesday afternoon.