Bagir strikes acquisition deal with Chinese manufacturer
Bagir has announced a strategic partnership with a leading Asian textile manufacturer which, coupled, with an increase in capital, is expected to help the company win major contracts from the world’s largest retailers.
The proposed partnership involves Shangdong Ruyi Technology Group, one of the largest textile manufacturers in China. Headquartered in Jining, Shandong, the company operates 13 domestic industrial parks and has a significant distribution with more than 4,000 points of sales across 6 continents.
The Chinese group has also over 20 subsidiaries, including three listed business in China, France and Japan. Precisely this global presence will help the company provide Bagir with significant new commercial opportunities, it said in a statement on Thursday.
As part of the deal, the Chinese group will acquire 54% of Bagir’s enlarged share capital and become a majority shareholder the textile company. The new capital will be used partly to expand the suit trouser and the jacket production lines in Bagir’s cost-competitive Ethiopian manufacturing base.
Eran Itzhak, Chief Executive Officer of Bagir said: "It has been our view for some time that Ethiopia is proving to be potentially transformational. The Shandong Ruyi Group team recognises the strength and experience that we have across our business and it is our advanced position in Ethiopia which they have identified as providing them with a global strategic advantage.
“With Shandong Ruyi Group as a key shareholder and partner we believe that Bagir will be best placed to exploit the opportunity presented by our Ethiopian manufacturing base far quicker and with more certainty than we could independently."
The company had announced earlier this month that it was in advanced talks with a textile manufacturer to form a strategic partnership, after warning that both revenue and adjusted EBITDA for FY 2017 will be below expectations.
Bagir has been struggling to remain competitive in the current challenging market conditions, hit by a slowdown in sales and an increase in manufacturing costs. It expects its base in Ethiopia will boost its volume orders, with the site expected to produce around 3,000 trousers per day by mid-2018.
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