Garment manufacturer Quang Viet Enterprise Co Ltd (廣越企業) on Thursday said it plans to subscribe to a rights issue by King Hamm Industrial Co Ltd (金漢實業), as the company expects the deal to create synergies and enhance its competitiveness in the knitwear sector.
Quang Viet is to purchase 13.65 million new shares issued by King Hamm at NT$24.5 each, it said in a filing with the Taiwan Stock Exchange, without specifying when the firms are expected to close the transaction.
The company said that the NT$334.425 million (US$11.14 million) deal would give it a 42 percent stake in King Hamm, which is headquartered in New Taipei City’s Sinjhuang District (新莊).
King Hamm, which has two plants in Vietnam, supplies high-end swimwear and functional wear to global brands, including North Face Inc and Under Armour Inc.
Quang Viet said the deal would help the company cope with industry trends, meet its long-term development needs and expand its production base in Vietnam.
The company also expects the deal to help expand its market share in the mid-range and high-end segments and increase its business scope, as the two sides have little overlap in customers and products.
Local media reported that Quang Viet chairman Yang Wen-hsien (楊文賢) and president Charles Wu (吳朝筆) on Thursday signed the investment agreement with King Hamm chairman Liu Hai-po (劉海波) at Quang Viet’s headquarters.
The transaction marked another milestone for Quang Viet, after the firm last month announced it would acquire a 60 percent stake in Jordan-based knitwear maker Atlanta Garment Manufacturing Co, as the Taiwanese firm in the short term aims to improve its global competitiveness through acquisitions, instead of building its own plants, Wu told an investors’ conference on Friday.
The company expects sales to grow 15 percent next year, as Atlanta is predicted to contribute US$17 million in revenue and King Hamm could contribute revenue of between US$35 million and US$40 million, the Chinese-language Apple Daily quoted Wu as saying.
Taipei-headquartered Quang Viet is the world’s second-largest down jacket supplier — behind South Korea’s Youngone Corp — manufacturing high-end down jackets for companies including Nike Inc, Adidas AG and North Face.
The company posted NT$1.28 billion in revenue for last month, a 91.36 percent jump from NT$669.75 million in the same period last year, bringing cumulative revenue for the first 10 months to NT$8.88 billion, up 10.1 percent year-on-year.
In light of growing customer demand, the company has set a whole-year sales target of NT$10 billion for this year, up from last year’s NT$9.04 billion.
Shares in Quang Viet were down 0.34 percent to NT$147.5 on Friday in Taipei trading.
The stock has retreated by 17.6 percent since hitting a high of NT$179 in August, Taiwan Stock Exchange data showed.
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