Nova Lifestyle (NVFY) Enters Agreement to Sell China-Based Subsidiaries
- AT&T (T) Agrees to Acquire Time Warner (TWX) for More than $80 Billion - WSJ
- Top 10 News for 10/17 - 10/21: Merger Rumors Abound; CEOs Depart; Tesla Kicks Autopilot Up A Notch
- Wall Street ends little changed; Microsoft hits record
- AT&T (T) in Advanced Talks to Acquire Time Warner (TWX) - DJ
- Rockwell Automation (ROK) Said to Attract Takeover Interest from Schneider Electric - Source
Get inside Wall Street with StreetInsider Premium. Claim your 2-week free trial here.
Nova LifeStyle, Inc. (Nasdaq: NVFY) announced it has signed a Share Transfer Agreement (“Agreement”) with Kuka Design Limited, a company incorporated in BVI (“Kuka BVI”) to sell NOVA BVI and its subsidiaries, which consists of the Company’s manufacturing operations in mainland China (the “Transaction”). With the slow-down of the Chinese economy and a significant increase in labor and other costs for manufacturing facilities in China, the Company decided to sell NOVA BVI, allowing the Company to transition to a “light-asset” business model with greater flexibility and scalability while also focusing its operations on designing, developing, branding, marketing and distributing furniture products in North America, Asia and around the world.
Highlights of the Proposed Agreement
- Purchase price of $8,500,000
- Upon closing, the Company will no longer own NOVA BVI or its subsidiaries based in mainland China.
- Closing is expected by October 30, 2016 and is contingent on certain customary closing conditions.
Benefits of Transaction for Kuka and Nova LifeStyle
- The Company will utilize the proceeds to continue to expand its marketing, distribution and e-commerce channels in North America, Asia, Europe and other new markets and for general working capital purposes.
- Nova LifeStyle can focus its production capabilities on designing, developing, branding, marketing and distributing furniture products and improving profit margins.
Management CommentaryJeffrey Wong, Chief Executive Officer of Nova LifeStyle, stated, "We are pleased to have reached an agreement at a fair valuation for our China-based business, and believe that Kuka Design BVI is the right partner to further grow the business through expanding its production capabilities in China. We feel this is truly a win-win for both Kuka Design BVI and Nova LifeStyle, as this transaction will allow our Company to focus its entire attention on designing, developing, branding, marketing and distribution of furniture products and the fast growing e-commerce market. We believe that this transaction will enhance the value of our shareholder’s holdings in the Company. We intend for the transaction process to continue over the next month and will keep investors apprised of our progress.”
Transaction DetailsUnder the Agreement, Kuka Design BVI will purchase from the Company all of the issued and outstanding shares of NOVA BVI and the subsidiaries owned by NOVA BVI - Nova Furniture (Dongguan) Co., Ltd., Nova Dongguan Chinese Style Furniture Museum and Dongguan Ding Nuo Household Products Co., Ltd., which include all their assets and liabilities, for $8,500,000.
As a part of the transaction, the Company made certain restructurings prior to the execution of the Agreement: 1) the Company incorporated a new direct wholly owned subsidiary Nova Samoa; 2) the Company transferred another direct wholly owned subsidiary NOVA BVI to Nova Samoa and NOVA BVI becomes a direct wholly owned subsidiary of Nova Samoa and an indirect wholly owned subsidiary of the Company; and 3) NOVA BVI transferred its wholly owned subsidiary Nova Furniture Macao Commercial Offshore Limited (“Nova Macao”) to the Company and Nova Macao becomes a direct wholly owned the subsidiary of the Company. Nova Samoa, NOVA BVI and Nova Macao are direct or indirect wholly owned subsidiaries of the Company before the consummation of the Transaction.
The Transaction is expected to be consummated (the “Closing”) after the fulfillment of certain customary closing conditions by October 30, 2016, as described herein and in the Agreement.
Additional Details Surrounding the TransactionThe Company has included additional details surrounding this transaction in its Form 8-K filing with the Securities and Exchange Commission.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- NYSE to Suspend Trading in MGT Capital Investments (MGT); Will Move to Delist
- British American Tobacco Offers to Acquire Remaining Shares of Reynolds American (RAI) for $56.50/Share
- Northwest Biotherapeutics (NWBO) Enters $5M Common Stock Registered Direct Offering