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Esprit Holdings Limited ( Esprit , HKEx: 00330) and China Resources Enterprise, Limited ( CRE , HKEx: 00291) today jointly announced that the companies have entered into a sale and purchase agreement in relation to their joint venture business in China ( Esprit China ). Esprit will effectively acquire the businesses of Esprit China from its joint venture partner CRE for an aggregate cash consideration of HK$3.88 billion.
Esprit China is a joint venture that is 51% and 49% owned by CRE and Esprit, respectively. Esprit China engages in the retail sale and wholesale distribution of Esprit and Red Earth branded apparel and accessories in the PRC on an exclusive basis. As of 30 June 2009, Esprit China operated 1,112 outlets in 171 cities across PRC, comprising 345 self-operated stores and 767 franchised stores, with net sales of HK$2.6 billion in the twelve months ended December 31, 2008.
Esprit will own 100% of the economic rights of Esprit China with effect from February 17, 2010 or such other date CRE and Esprit agreed. This proposed transaction represents a win-win outcome for both Esprit and CRE and their respective shareholders.
Mr. Heinz Krogner-kornalik, Executive Chairman of Esprit,
said,
The China market presents great strategic value to
Esprit and is high on our priorities to strengthen our
presence in Asia Pacific. The proposed acquisition will
allow us to gain full operational, management and ownership
control of Esprit China. Building on top of the solid
foundation CRE and Esprit established, we believe Esprit's
business in China will become one of the most important
growth engines driving the further expansion of Esprit in
the medium term. We will integrate Esprit China into our
global system and allocate the necessary resources to fully
realize Esprit's brand potential in China. We expect the
acquisition to add a new growth dimension to the business of
Esprit and create value to our shareholders.
Mr. Chen Lang, Managing Director of CRE, said, The
proposed disposal of our non-core investment in Esprit China
is consistent with our stated strategy to focus on market
leadership in core consumer businesses, namely retail,
beverage, food processing and distribution. Specifically,
this would enable our management team to dedicate resources
towards, and re-deploy the sale proceeds to invest in, the
continued growth of our core businesses. Together with the
asset swap transaction announced on October 29, 2009, this
proposed transaction is a testament to CRE management's
ability to deliver on our promises to shareholders in a
timely fashion.
The proposed transaction constitutes a discloseable and connected transaction from CRE's perspective, and a discloseable transaction from Esprit's perspective, with completion subject to the satisfaction of certain conditions.
About China Resources Enterprise, Limited
China Resources Enterprise, Limited is listed on the Hong Kong Stock Exchange and is one of the constituent stocks of the Hang Seng Index in Hong Kong. The Group focuses on the consumer businesses in both the Chinese Mainland and Hong Kong, with core activities being retail, beverage, food processing and distribution and property investment.
About Esprit Holdings Limited
Esprit Holdings Limited generated a worldwide group turnover of around HKD 34.5 billion (as of 30.06.2009), with net profits of around HKD 4,745 million. The share of Esprit Holdings Limited is listed on the Hong Kong stock market and is included in both the Hang Seng Index, in the MSCI Index Hong Kong, as well as in the FTSE ALL World-index for Hong Kong, S&P/hKEx LargeCap Index and S&P Asia 50 Index. Esprit Holdings Limited operates more than 800 directly managed retail stores worldwide and distributes its products via more than 14,000 wholesale locations around the globe. The company has more than 1.1 million square metres of sales area in more than 40 countries.
Learn more about Esprit.