China Dongxiang (Group) Co., Ltd. is expected to complet its acquisition of the assets of Japanese ski and outerwear maker Phenix Co., Ltd. today from a Japanese financial services company that acquired it four years ago as part of a rescue orchestrated by the Japanese government.


Under terms of the deal, China Dongxiang will acquire all equity and debt held by Japan's Orix Corp. for two yen, or about 20 cents. The Chinese maker of branded sportswear will then recapitalize the company and issue 80.4 million shares of new Phenix stock. It will buy 71.4 million shares worth $480,308 and distribute the remaining 9 million shares worth about $60,000 back to Orix, which had held Phenix debt of similar value.


Upon completion, Phenix will be 91% owned by China Dongxiang and 9% by ORIX.

“The acquisition is in line with our long-term strategy of international and regional multi-branding and beneficial to our future development in three areas,” said China Dongxiang Chairman Chen Yihong. “Firstly, Japan is renowned for its quality consumer market, especially in the fashion wear market. Phenix possessed over 50 years of experience in Japan with excellent R&D capabilities. Through the acquisition, China Dongxiang's capabilities in R&D will be further enhanced with introduction of the experienced R&D talent of Phenix.


“Secondly, the acquisition will enable the Group to tap opportunities in China's ski and outdoor sportswear market, as the Phenix brand is a leading ski product brand in Japan with the highest market share.

 

“Thirdly, China Dongxiang will become the brand owner of KAPPA brand in Japan upon completion of the acquisition. This helps the company to further expand its global footprint and achieve economies of scales while lowering its production cost. We believe the acquisition will bring synergy to the business of the company and Phenix in both the PRC and Japan markets.”

“Our vision is to become the leading multi-brand sportswear enterprise in the PRC. With the acquisition, China Dongxiang will further enhance its brand image through improving R&D capabilities diversifying its product mix and cost control. By leveraging on our unique, fashionable design and effective marketing strategies, China Dongxiang will capitalize the market opportunities and actively expand our business to attain greater results, and generate the best possible returns to our shareholders.” Mr. Chen concluded.


China Dongxiang (Group) Co., Ltd. is a leading international sportswear brand enterprise based in China and was successfully listed on the Stock Exchange of Hong Kong Limited on Oct. 10, 2007. The Group is primarily engaged in the design, development, marketing and wholesale of branded sportswear in China. Since May 30, 2006, China Dongxiang has owned all rights to the internationally recognized Kappa Brand in China and Macau. Its products convey an active, fashionable and youthful image.


Phenix is a sporting apparel company with core operations in design, development and sales. Its operation commenced in 1952 and its major brands include “PHENIX” in the ski and outdoor sportswear market globally with the highest market shares in Japan and “KAPPA” in the football and athletic-wear market in Japan. Phenix is also one of the three Kappa brand owners in the world, with the possession of Kappa brand in Japan. The net assets value of Phenix was approximately 473,643,000 Yen ($432,015) as of Feb. 28, 2007.