Li & Fung, a Hong Kong-listed consumer goods exporter, said it will pay a lower than expected Euro60 million (HK$593.33 million) for KarstadtQuelle International Services (KQIS), the sourcing arm of Europe's largest department store and mail order group KarstadtQuelle. The acquisition price was well below analysts' estimate of Euro100 million when Li & Fung signed a letter of intent with Germany's KarstadtQuelle in June. Li & Fung, which raised HK$2.72 billion last month through a top-up share placement, will fund the takeover with internal resources. The firm said future sourcing volume from KQIS could reach Euro2 billion, based on KarstadtQuelle's existing retail operations. It did not give any timeframe when it will achieve that target, while KarstadtQuelle management board member Helmut Merkel yesterday said it will be done by 2008. Li & Fung, which earlier said the KarstadtQuelle deal could boost its turnover in Europe to at least US$1 billion a year, has been making purchases as part of a three-year plan to raise its revenue to US$10 billion next year from US$6 billion last year. KQIS made net profits of Euro11 million last year on sales of Euro1.15 billion, Li & Fung said. No comparable figures were given for 2004. Li & Fung will take over the entire international sourcing business of KQIS, which has 1,000 employees and retail and mail order businesses in Germany. It also has a sourcing network of 22 offices. 'The acquisition will bring to the group substantial additional sourcing volume and the move is in line with our initiative to further expand in Europe and to maintain a much more balanced geographical mix of business,' Li & Fung group managing director William Fung Kwok-lun said in statement yesterday. The acquisition is subject to the approval of the Federal Cartel Office of Germany.