By  on February 25, 2010

Li & Fung Ltd. extended its U.K. reach Thursday, acquiring Manchester-based private label producer Visage Group Ltd. for as much as 173 million pounds, or $266.9 million at current exchange.

Bruce Rockowitz, president of the Hong Kong sourcing giant, said the deal would generate business with the majority of leading British retailers.

“This acquisition dramatically strengthens LF Europe’s growth platform,” Rockowitz said. “It will add substantial scale to our existing operation and further our objective of developing a significant European onshore presence.”

Visage designs and produces men’s, women’s and children’s apparel for high street and mass retailers in the U.K. The firm, which has about 500 employees and branch offices in Hong Kong, Shanghai, Guangzhou, Dhaka and Delhi, posted profits of 14 million pounds, or $21.6 million, for the year ended Jan. 31. Annual sales tallied 186 million pounds, or $287 million.

The initial purchase price was 57.5 million pounds, or $88.7 million, and future performance-based payments could total up to 115.5 million pounds, or $178.2 million. Li & Fung funded the deal itself. Shares of the firm dipped 0.1 percent to 35.70 Hong Kong dollars, or $4.60, Thursday.

This is the latest in a string of acquisitions for Li & Fung. Although it has a cash stockpile of about $1 billion and an itch to buy, the firm has also been cutting sourcing deals with companies such as Wal-Mart Stores Inc., Hudson’s Bay Trading Co. and Liz Claiborne Inc.

Last month, Wal-Mart consolidated an initial $2 billion of its $300 billion product budget under Li & Fung.

The deal with Claiborne, however, has narrowed in scope since the firm licensed its namesake brand to J.C. Penney Co. Inc., which will take over sourcing for its fall launch. Li & Fung paid Claiborne $75 million last year as part of the production deal, but Claiborne said this week that it would have to refund Li & Fung $24 million as a result of the deal with Penney’s.

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