HONG KONG — The board of directors (the “Board”) of Honma Golf Limited (“HONMA” or the “Company”, Stock Code: 6858) is pleased to announce that on 26 January 2018, the Company and ITOCHU Corporation (“ITOCHU”) entered into a strategic alliance agreement (the “Strategic Alliance Agreement”).
Strategic Alliance with ITOCHU to Revitalize its Apparel Business using a “golf total brand approach”
HONMA is one of the most prestigious and iconic brands in the golf industry. As part of its continued efforts to deliver growth and to provide customers with a complete golf lifestyle experience through offering, among other products, HONMA-branded apparel, the Company has been actively exploring partnerships to revitalize its Apparel Business using a “golf total brand approach”. It is expected that the 2019 Spring/Summer season will be the first season on which the Company and ITOCHU will co-operate.
The Company believes that there is significant room to grow its apparel business, which together with bags and other accessories, accounted for approximately 13.4% of the total revenue of the Company and its subsidiaries for the six months ended 30 September 2017, as compared to approximately 60% of the total revenue of many of its industry peers.
The formation of a strategic alliance between the Company and ITOCHU will allow the Company to work with ITOCHU to re-develop the Company’s apparel business in Japan, as well as other markets where HONMA has already built a stable consumer base from its golf clubs business. At the same time, this partnership will entitle the Company to tap into ITOCHU’s rich networks and know-how in the apparel and textile industry to support the Company’s re-launch of its apparel business leveraging its brand equity.
The Company strongly believes that this strategic alliance with ITOCHU will be invaluable in its effort to accelerate sales growth across all markets in the near to mid term.
Disposal of Shares by Controlling Shareholder to Strategic Investors
As part of the strategic alliance, Kouunn Holdings Limited (“Kouunn Holdings”), a controlling shareholder of the Company, has conditionally agreed to dispose of an aggregate of 99,189,000 shares of the Company (representing approximately 16.29% of the issued share capital of the Company as at the date of this announcement) to ITOCHU and Chia Tai Primrose Holdings Limited, a wholly-owned subsidiary of Charoen Pokphand Group Company Limited (“CPG”) (the “Disposal”). Completion of the Disposal is expected to take place on or around 31 January 2018. Immediately upon completion of the Disposal, Mr. Liu Jianguo and Kouunn Holdings will remain as controlling shareholders of the Company.
The Board welcomes the strategic investments by ITOCHU and CPG, which it believes will diversify the Company’s shareholding structure and drive improvements in the Company’s corporate governance practices.
Looking forward, Mr. Liu Jianguo indicated that the Board believes that ITOCHU’s investment will further enhance its relationship with the Company resulting from the Strategic Alliance Agreement. For its part, ITOCHU looks forward to strengthening the cooperation with HONMA in the apparel and textile industry through its comprehensive network and experience and to exploring possible mutually beneficial opportunities in the future.