Nova LifeStyle, Inc., a, leading innovative designer, manufacturer and distributor of modern life style furniture based in the United States has just made it public that it has entered an agreement with Kuka Design Limited to sell its manufacturing operations in mainland China for $8.5 milliion.
Nova said in an official statement, a benefit of the sale is the company will utilize the proceeds to continue to expand its marketing, distribution and e-commerce channels in North America, Asia, Europe and other new markets and for general working capital purposes. Nova LifeStyle has the goal to focus more of its production capabilities on designing, developing, branding, marketing and distributing furniture products and improving profit margins.
On to the agreement, Nova cited the slow-down of the Chinese economy and a significant increase in labor and other costs for manufacturing facilities in China. These are factors in the decision to sell, allowing the Company to transition to a "light-asset" business model with greater flexibility and scalability. This is behind also the act of focusing its operations on designing, developing, branding, marketing and distributing furniture products in North America, Asia and around the world.Nova's closing is expected by October 30, 2016, and is contingent on certain customary closing conditions. The Company has included additional details surrounding this transaction in its Form 8-K filing with the Securities and Exchange Commission.
"We are pleased to have reached an agreement at a fair valuation for our China-based business, and believe that Kuka Design BVI is the right partner to further grow the business through expanding its production capabilities in China. We feel this is truly a win-win for both Kuka Design BVI and Nova LifeStyle, as this transaction will allow our Company to focus its entire attention on designing, developing, branding, marketing and distribution of furniture products and the fast growing e-commerce market. We believe that this transaction will enhance the value of our shareholder's holdings in the Company. We intend for the transaction process to continue over the next month and will keep investors apprised of our progress." explained Jeffrey Wong, chief executive officer of Nova LifeStyle.
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