Xidelang proposes to expand into apparel manufacturing

PETALING JAYA: China-based sports shoe maker Xidelang Holdings Ltd has proposed to acquire the entire stake in JinJiang YangSen Garments Co Ltd to diversify its business to include manufacturing of apparel.

However, the acquisition sum will only be disclosed upon completion of the due diligence exercise.

Xidelang proposes to satisfy the purchase consideration via cash and/or issuance and allotment of new shares at an issue price of 22 sen per share.

At present, Xidelang is involved in the design, manufacturing and marketing of sports and leisure shoes as well as design and marketing of sports and leisure apparel.

Xidelang said the acquisition will enable it to vertically integrate its existing operation and further strengthen and complement its existing designing and marketing of apparel, leading to increase in sales of the division.

“The proposed expansion would also provide another source of revenue and income to the group and is part of the group’s long-term strategy of diversifying into an area with positive growth prospects,” it added.

Fujian province-based JinJiang YangSen distributes its apparel to international markets including the US, Europe, the UK, Turkey and Brazil.

Xidelang said as contribution from the manufacturing of apparel may potentially exceed 25% of the group’s net profits in the future, the board proposes to seek prior approval from the company’s shareholders at a special general meeting for the proposed expansion plan.

Xidelang’s share price rose 0.5 sen to 17.5 sen yesterday on some 13.99 million shares done.