Japan's Softbank buys Cheung Wah as its H.K. listed flagship

Asian Economic News, Jan 24, 2000

HONG KONG, Jan. 20 Kyodo

Japan's Internet giant Softbank Corp. announced Thursday it will acquire a 61.1% stake in Cheung Wah Development Ltd. of Hong Kong for 207.5 million H.K. dollars (about 26.77 million U.S. dollars) in cash.

The Hong Kong dyestuff distributor and garment manufacturer listed on the Stock Exchange of Hong Kong will be renamed Softbank Investment International (Strategic) Ltd., it said.

Through its subsidiary, Softbank Investment (International) Holdings Ltd., Softbank entered into a subscription agreement with Cheung Wah, according to a legal announcement published in Hong Kong newspapers Thursday.

Softbank said in the statement it will expand the Hong Kong company into Internet and Internet-related businesses.

"In particular, the company will evaluate the potential in converting its existing off-line businesses into online businesses," the announcement said.

"In the future, the businesses of the company will also diversify into investment into companies conducting Internet and Internet-related activities as well as investing in and providing consultancy services to off-line businesses in the Asia-Pacific region, which either are converting or have the potential to convert themselves into online businesses," it said.

Softbank said it currently has no plan for any redeployment of the fixed assets of Cheung Wah, nor is there a plan to inject any of its existing assets or businesses into the Hong Kong company.

Cheung Wah's board of directors is expected to change upon completion of the deal in mid March, with Softbank's executive vice president and chief financial officer Yoshitaka Kitao expected to become its executive chairman.

The announcement of the deal comes just two days after Softbank agreed to lead a syndicate investing 20 million U.S. dollars in Hong Kong-based Web site operator Alibaba.com Corp.

Founded in 1981, Softbank has a market capitalization of 8,400 billion yen (about 79.8 billion U.S. dollars) as of Jan. 7. In terms of market capitalization, Softbank is one of the largest companies listed on the Tokyo Stock Exchange.