Temasek Buys $300 Million Stake in Li & Fung's Logistics Unit

(Bloomberg) -- Li & Fung Ltd., the world’s largest supplier of consumer goods, is selling 21.7% of its logistics business to Temasek-owned Dahlia Investments Pte Ltd. and postponing plans for listing the unit.

Dahlia, an indirect wholly-owned subsidiary of Singapore’s state investor Temasek Holdings Pte, will pay $300 million in cash for the stake. The deal values its logistics unit at about $1.4 billion, Li & Fung said in a filing Friday. Shares rose as much as 19% after the announcement.

The proceeds from the stake sale will be primarily used to fund future capital expenditure, repay existing bank debt and speed up growth initiatives at the logistics unit, according to the filing.

The deal will bolster the Hong Kong-based supplier to global giants like Walmart Inc. and Macy’s Inc. as it attempts to turn its business around from a five-year profit slump. A wave of bankruptcies and store closures among its big retail clients sparked a three-year restructuring plan and the company said earlier this month that the tit-for-tat tariff war between the U.S. and China will accelerate the diversification of its supply chain out of China.

“The company likely will miss its 2017-19 goals, struggling to retain orders from customers amid uncertain U.S.-China trade outcomes,” Catherine Lim, an analyst with Bloomberg Intelligence said in a note this month.

To contact the reporter on this story: Daniela Wei in Hong Kong at jwei74@bloomberg.net

To contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, Bhuma Shrivastava

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