Merchandise sourcing company Li & Fung will create the world's largest sourcing network for retailers through its acquisition of competitor Colby Group Holdings in a HK$2.2 billion deal.
Colby was acquired for less than one-third of the HK$7.2 billion valuation put on it in June when the company - under the name ColbyNet - attempted to list on the main board for the second time this year.
Li & Fung will issue 113.2 million new shares at HK$17.25 each to Colby's owners - Allan Zeman and Bruce Rockowitz - and pay cash of HK$247.5 million. The new stock represents 3.95 per cent of Li & Fung's enlarged share capital.
'If you put the two networks together this is the largest sourcing network available to buyers of this type of labour intensive merchandise in the world,' said Li & Fung group managing director William Fung Kwok-lun.
Many of Colby's clients are department stores in the United States, which will complement Li & Fung's existing network.
Li & Fung expects to benefit from economies of scale by combining its back office operations with Colby's. But Mr Fung said there would be no redundancies from the merger.