Bagir's Shandong Ruyi deal delayed again
China’s Shandong Ruyi has requested additional time to complete its pending deal with tailoring specialist Bagir, saying it wants to discuss some changes to the agreed terms.
The plans for the proposed takeover, which involves Shandong Ruyi investing $16.5 million to acquire a 53.7% shareholding in Bagir, are taking time to materialise. The deal was first announced in November 2017.
The Chinese firm has already made an initial $3.3 million payment, but it has yet to hand over a further $13.2 million to complete the deal. The remaining cash payment was due on 30 May, Bagir said.
The company granted Shandong Ruyi an extension in December due to a delay in receiving approval by the Chinese Government. The Chinese firm, an existing supplier of Bagir, has now requested a further extension until 18 June.
“Whilst the board consider Shandong Ruyi's failure to complete the proposed investment as a fundamental breach of the share purchase agreement entered into with Shandong Ruyi, the board have agreed to this short extension due to the potential benefits that the strategic partnership might still have on the company and its future prospects,” said Bagir in a statement on Friday.
The tailoring specialist, which manufactures clothes for retail brands including H&M and Brooks Brothers, has previously described the partnership as an opportunity to develop expand its manufacturing base in Ethiopia.
Currently, the facility has capacity to produce up to 3,500 suit trousers per day, and Bagir wants to increase its capacity to 3,000 full suits per day by 2020 thanks to Shandong Ruyi’s investment and equipment.
In February it was revealed that the Chinese textiles company would provide Bagir with manufacturing equipment for exclusive and indefinite use in its Ethiopian manufacturing facility, but it seems Shandong Ruyi has also failed to meet this promise, according to Bagir’s statement.
At least, Bagir announced that revenues grew 10% to $56.4m in 2018, and that sales grew by a further 46% in the first three months of the new financial year compared to the prior year. The Israeli textile firm also managed to return to profitability in the second half of 2018 in adjusted Ebitda terms.
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