Looking to make further inroads in the leather goods sector and spread out its Asian sourcing, Luen Thai Holdings Ltd. has entered into agreement to acquire 100 percent interest in Universal Elite Holdings Limited for $28 million.
Universal Group, founded in 1972 and based in Hong Kong, manufactures handbags and small leather goods in the “affordable luxury” market. Universal Group has facilities in Myanmar, Thailand and China, with more than 10,000 employees.
Luen Thai, which had revenue of $378 million and an operating profit of $13.27 million for the six months ended June 30, said by combining its accessories division with Universal Group, it will create one of the leading manufacturers in the handbags and small leather goods market, with 30,000 employees. Luen Thai said it will be the only manufacaturer in the sector with production facilities in four Generalized System of Preferences (GSP) countries–Cambodia, Myanmar, Philippines and Thailand–that offers duty-free to exports to the U.S. and European Union under separate programs.
The U.S. included travel goods such as leather luggage, handbags and small leather goods in the GSP program last year and this year Congress renewed the trade preference law. It is designed to provide duty-free access for critical inputs and other products no longer made in the U.S. from developing nations.
At the time of the passage, Rick Helfenbein, president and CEO of the American Apparel & Footwear Association, said, “The Generalized System of Preferences is a critical component of our U.S. trade agenda. By renewing the GSP program, American businesses can use duty-savings to compete internationally, lower costs for American families, hire more American workers and invest in new products.”
Raymond Tan, CEO of Luen Thai, said, “With Universal Group, Luen Thai can be further strengthened in our capability of product development and gain two important GSP countries manufacturing capacity offering additional duty-free benefit to our strategic customers.”
Universal Group will continue to be led by its president, Eric Chu, and operated as a Strategic Business Unit under Luen Thai. Chu said through the acquisition, “Universal Group can be further elevated to the next level with the support of Luen Thai in finance, human resources and technology.”
Luen Thai is one of the largest fashion and lifestyle apparel and accessories manufacturers in the world. Combining with Universal Group, Luen Thai will now have manufacturing facilities in seven countries: Cambodia, China, Indonesia, Myanmar, Philippines, Thailand and Vietnam.