Li & Fung pays Euro60m for KarstadtQuelle unit

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.