Li & Fung has made a $1.1bn (£820m) strategic divestment in a bid to simplify its business model.
The global supply chain giant announced that it has agreed to sell three of Li & Fung’s product verticals – furniture, sweaters and beauty – to Hony Capital and the Fung Group.
Subject to independent shareholders’ approval, the transaction is expected to close in the first half of 2018.
The move is part of Li & Fung’s three-year plan, which involves delivering “long-term” value to its shareholders and elevating it digital offering. The plan will conclude in 2019.
Spencer Fung, croup CEO of Li & Fung, said, “The strategic divestment of the product verticals allows Li & Fung to focus on its core competencies and further strengthens our capital structure.
“The $1.1bn proceeds will allow us to pay a generous dividend to our shareholders, and the remaining $580m of cash will give us more financial flexibility as we continue to execute our three-year plan goal of building an end-to-end digital supply chain.
“Our first-half results were solid and our customers and vendor partners are responding very positively to our new digital solutions. We are very excited to be creating a future supply chain that does not yet exist in the market.”