Friven & Co. shareholders approve China Children Fashion acquisition

$64mln deal aimed to cater to lifestyle needs of women and young families in the region.

Shareholders of SGX Catalist-listed lifestyle company Friven & Co. Ltd. (Friven & Co), approved the very substantial acquisition of China Children Fashion Holdings Pte. Ltd. (CCFH), at an extraordinary general meeting on Thursday.

With its shareholders’ approval, Friven & Co. will acquire the entire issued and paidup
share capital of CCFH from Zhang Zhize, Shi Xiaohong, Go Pit Ban and Ng Wing Chuen (the Vendors) for a total consideration of S$64.0 million, to be satisfied by the issue of up to 1,280,000,000 new ordinary shares in Friven & Co. (Shares) at S$0.05 per Share (the Acquisition). The purchase consideration is made up of two (2) parts, the completion consideration comprising of 1,000,000,000 new Shares (the Completion Shares) and the incentive payment comprising of 280,000,000 new Shares (the Incentive Shares). The new Shares issued as purchase consideration represent approximately 62.7% of the enlarged capital and after a 4 to 1 share consolidation, will become 320,000,000 Consolidated Shares, according to a Friven & Co. report.

The Vendors will receive the Completion Shares based on an agreed valuation of five (5) times CCFH’s audited net profit after tax of at least RMB45.0 million (S$9.12 million) for the financial year ended 31 December 2009 (FY2009), and will receive the full number of Incentive Shares on the basis that the audited net profit after tax for the financial year ended 31 December 2010 (FY2010) is at least RMB55.0 million (S$11.15 million).

Rationale for the acquisition
The Friven Group’s core business used to be in the manufacturing and distribution of
upmarket bedding and bedlinen products as well as the distribution of a wide variety of home living accessories. Over the years, it has started its transition into a lifestyle company by distributing a variety of children’s bedlinen, accessories and toys through its “Friven Kids” brand. With the Acquisition, the Friven Group together with the CCFH Group (collectively known as the Enlarged Group) will be able to offer children’s apparel and merchandise through its “JJL Kids” brand to form a complete children’s product offering in apparel, bedlinen and accessories.

Commenting on the Acquisition, Mr Gary Loh, Executive Chairman of Friven & Co. said, “With CCFH, we will not only have one more brand to add to our portfolio, but will also become a leading specialty retailer of home and children’s lifestyle products in Asia, catering to the complete lifestyle needs of women and young families in Southeast Asia and China.”

The Enlarged Group will also provide shareholders with a larger entity in terms of revenue and profit. “We are now a larger entity due to the strong financial position of CCFH. We will also benefit from the strong business synergies to scale up our merchandising to feed this fast growing retail network in China,” said Mr Loh.