Texhong Textile Group, one of world’s largest core spun yarn suppliers, formed a new joint venture company named Texhong Winnitex Holdings Ltd to acquire the entire equity interest in Winnitex Holdings Ltd, Winnitex Ltd and Zhejiang Qing Mao Weaving, Dyeing, Printing Co. Ltd. (Collectively ‘the Winnitex Group’) at a total value of about HK$1350 mn ($172.78 mn). Texhong Winnitex has been set-up for the purpose of the reorganisation. It will be held 80 per cent by the Texhong Textile Group and 20 per cent by Wai Chi Kwok, Jacob and Wai Chi Wah, Nelson, said by the company. After deducting the cash received from the acquisition of 20 per cent equity interest in joint venture shares, the net cash consideration to be paid by Texhong Textile will be less than HK$900 mn ($115.19 mn). The joint venture’s combined annual income will exceed RMB350 mn ($50.67 mn) after production expansion in Vietnam and Nicaragua.
The Winnitex Group is a renowned leading group in dyed woven fabrics industry. Through business reorganisation, 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. Jacob will lead and manage the new joint venture with his experienced management team. The reorganisation 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.
“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 our experienced management team and extensive customer base, and significantly increase our annual production capacity of dyed woven fabrics by 90 mn yards,” said Hui Tsz Wai, Executive Director of Texhong Textile.
“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 China, 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 December 31, 2017 was approximately HK$259 mn and HK$213 mn 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, etc. and primarily provides one-stop services, ranging from spinning, weaving, dyeing and finishing to the production of dyed woven fabrics.