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The Board is pleased to announce that on 11 November 2015, the Purchaser and the Vendor entered into the Agreement in relation to the acquisition of the Intellectual Properties for a consideration of EUR19,200,000 (equivalent to approximately HK$159,929,000). The Intellectual Properties essentially constitute the 'C.P. Company' brand from Italy.
LISTING RULES IMPLICATIONSSince one of the applicable percentage ratios for the Acquisition is more than 5% but all of which are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements under the Listing Rules.
THE AGREEMENTDate: 11 November 2015
Parties: (a) Purchaser
(b) Vendor
The Intellectual Properties to be acquiredSubject to the terms and conditions of the Agreement, the Vendor agreed to sell, and the Purchaser agreed to purchase, the Intellectual Properties, which comprise trademarks, domain names and designs relating to different garment product categories worldwide, and they essentially constitute the 'C.P. Company' brand from Italy.
Insofar as the Company is aware, as informed by the Vendor, the outstanding book value of the Intellectual Properties after amortisation as recorded in the Vendor's unaudited accounts as at 30 September 2015 was approximately EUR1,745,000 (equivalent to approximately HK$14,535,000).
Insofar as the Company is aware, based on the information provided by the Vendor, pursuant to a royalty arrangement under a distribution agreement entered into between the Vendor and a Korean distributor over several of the trademarks (within the scope of the Intellectual Properties), the said Korean distributor paid an annual royalty to the Vendor in the amount of approximately US$43,000 (equivalent to approximately HK$333,000) for each of the two years ended 31 December 2013 and 31 December 2014, and other than the aforementioned royalty arrangement in respect of the said Korean trademarks, none of the other Intellectual Properties (as standalone assets) has generated any income in the two years ended 31 December 2013 and 31 December 2014. As the Purchaser acquired the Intellectual Properties only, the abovementioned distribution agreement was not transferred to the Purchaser. Further details of the Group's distribution strategies are set out in the section headed 'Reasons and Benefits of the Acquisition' below.
ConsiderationThe consideration for the Acquisition is EUR19,200,000 (equivalent to approximately HK$159,929,000) (the 'Consideration'), which has been paid by the Purchaser to the Vendor in cash on the date of signing of the Agreement.
The Consideration was funded by internal resources of the Group.
The Consideration has been determined after arm's length negotiations between the Purchaser and the Vendor. The Acquisition enables the Group to strengthen its brand portfolio and leverage off the Group's product development and manufacturing capabilities. The Directors consider that the Agreement is on normal commercial terms between the Purchaser and the Vendor and that the terms of the Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.
INFORMATION OF THE GROUP, THE PURCHASER AND THE VENDORThe Group is principally engaged in (i) garment manufacturing; and (ii) branded product distribution, retail and trading.
The Purchaser, an indirect wholly-owned subsidiary of the Company, is a company incorporated in Luxembourg with limited liability whose principal business will be the holding and licensing of the Intellectual Properties.
The Vendor is a company incorporated in Italy with limited liability and is a manufacturer and distributor of garments and accessories. It was the owner of the Intellectual Properties prior to the entering into of the Agreement.
To the best of the Directors' knowledge, information and belief, and after having made all reasonable enquiries, the Vendor and its ultimate beneficial owners are third parties independent of the Company and its connected persons (as defined in the Listing Rules).
REASONS AND BENEFITS OF THE ACQUISITIONIt has been one of the Group's strategies to expand its branded product distribution business by introducing products under its own brands, and the Company considers that the acquisition of the 'C.P. Company' brand, being a well-established Italian apparel brand with nearly
40 years of history and synonymous with innovative designs and pursuit for personality, allows the Group to further this strategy and expand its brand portfolio. As the Company only acquires the Intellectual Properties and does not acquire the manufacturing or distribution business in connection with the Intellectual Properties from the Vendor, upon acquiring the Intellectual Properties, the Company will devise its own marketing strategy and establish its international distribution channels and network for the products bearing the 'C.P. Company' brand, which can also leverage off the Group's product development and manufacturing capabilities and the experience in distributing branded garments.
LISTING RULES IMPLICATIONSSince one of the applicable percentage ratios for the Acquisition is more than 5% but all of which are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements under the Listing Rules.
DEFINITIONSIn this announcement, the following expressions shall have the following meanings, unless the context requires otherwise:
'Acquisition' the acquisition of the Intellectual Properties pursuant to the Agreement
'Agreement' the sale and purchase agreement entered into between the Purchaser and the Vendor on 11 November 2015 in respect of the sale and purchase of the Intellectual Properties
'Board' the board of Directors
'Company' Tristate Holdings Limited, a company incorporated in Bermuda with limited liability whose issued Shares are listed on the main board of the Stock Exchange
'Consideration' has the meaning ascribed to it under the section headed 'The
Agreement - Consideration' in this announcement
'Director(s)' the director(s) of the Company
'EUR' Euro, the lawful currency of the euro area
'Group' the Company and its subsidiaries
'HK$' Hong Kong dollars, the lawful currency of Hong Kong
'Hong Kong' the Hong Kong Special Administrative Region of the People's Republic of China
'Intellectual Properties' the titles, interests and rights of the Vendor on the
trademarks, domain names and designs representing the 'C.P. Company' brand
'Listing Rules' the Rules Governing the Listing of Securities on the Stock
Exchange
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