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Texhong Textile acquires Winnitex, a leading company in dyed woven fabrics industry, and its subsidiaries
Integrates and establishes its global business in dyed woven fabrics; Enhances edges of its vertically integrated operations
HONG KONG, Dec 12, 2018 - (ACN Newswire) - Texhong Textile Group Limited ("Texhong Textile" or the "Group"; stock code: 2678), one of the world's largest core spun yarn suppliers, formed a new joint venture company, Texhong Winnitex Holdings Limited ("Texhong Winnitex"), to acquire the entire equity interest in Winnitex Holdings Limited ("Winnitex"), Winnitex Limited ("Winnitex HK") and Zhejiang Qing Mao Weaving, Dyeing, Printing Co., Ltd. ("Zhejiang Qing Mao") (collectively "the Winnitex Group") at a total consideration of about HK$1.35 billion.
The Winnitex Group is a renowned leading group in dyed woven fabrics industry. Through business reorganization, the entire business of the Winnitex Group and the Group's existing weaving and dyed woven fabrics businesses in Vietnam and Nicaragua will be integrated under Texhong Winnitex. Mr. Wai Chi Kwok, Jacob, will lead and manage the new joint venture with his experienced management team. The reorganization will lead to the establishment of a global vertically integrated industrial chain for the Group's dyed woven fabrics business, and the Group can also leverage its strategic advantages in Vietnam and the tax-free zone in Nicaragua, to generate tremendous synergies.
Mr. Hui Tsz Wai, Executive Director of Texhong Textile, said, "Winnitex Group operates over 50 years in the industry and has a long track record of direct sales to large international fashion and workwear brands, and is well-known for its service, quality, reliability and innovation within the textile industry. This transaction will enable Texhong Winnitex to leverage experienced management team and extensive customer base, and significantly increase our annual production capacity of dyed woven fabrics by 90 million yards. Later on, the joint venture will lead to an increase in the scale of production in Vietnam and Nicaragua. The vertical integration of spinning, weaving and dyeing activities will establish a new milestone for the Group's dyed woven fabrics business. Benefitting from the resultant business integration and sharing of customer base, we are confident that the Group's capability to produce high-quality dyed woven fabrics in the PRC, Vietnam and Nicaragua and its profitability will be significantly enhanced."
Based on the unaudited pro forma combined accounts of the Winnitex Group, the profit before and after tax for the year ended 31 December 2017 was approximately HK$259 million and HK$213 million respectively. Among the Winnitex Group, Winnitex operates as a holding company while Winnitex HK, wholly owned by Winnitex, principally engages in the sale, marketing and development of dyed woven fabrics in Hong Kong. Zhejiang Qing Mao, established in the PRC, primarily provides one-stop services, ranging from spinning, weaving, dyeing and finishing to the production of dyed woven fabrics.
Texhong Winnitex has been set up for the purpose of the reorganization. Texhong Winnitex will be held 80% by the Group and 20% by Mr. Wai Chi Kwok, Jacob and Mr. Wai Chi Wah, Nelson. After deducting the cash received from the acquisition of 20% equity interest in joint venture shares, the net cash consideration to be paid by Texhong Textile will be less than HK$900 million. The joint venture's combined annual income will exceed RMB3.5 billion after production expansion in Vietnam and Nicaragua.
Sectors: Daily Finance, Daily News
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