Partner, Matt Reynolds and Senior Associate, Dan Stumm, have advised eCargo Holdings Limited (ASX:ECG) (ECG) on its acquisition of 85% of Metcash Export Services Pty Ltd which includes its subsidiary Metcash Asia Limited, a wholly-owned foreign enterprise in China – from Metcash Trading Limited, a wholly-owned subsidiary of Metcash Limited (ASX:MTS) (Metcash).
The consideration paid for the acquisition was A$2.5 million plus 85% of the net asset value of the business of A$5.8 million and deferred compensation of up to A$3.5 million funded by a combination of ECG’s existing cash reserves and available facility.
This successful acquisition of 85% of Metcash Asia Limited allows ECG to create a one-stop offering for businesses intent on capturing the attention of China’s growing consumer market – both online and via traditional bricks and mortar stores.
ECG and Metcash will now cooperate on supply and export opportunities, and the China Head of Metcash will be appointed as CEO of ECG.
ECG is an eCommerce, technology and specialist execution group of companies, operating in both China and Australia. It acts as a one-stop enabling partner for designer fashion, branded apparel and retail companies seeking to sell their products online in China by providing integrated online and offline technology and supply chain solutions.
Metcash is Australia’s leading wholesaler and distributor. It supplies and supports more than 10,000 independent retailers across the food, liquor and hardware sectors. Some of its retail customers include IGA, Mitre 10 and Cellarbrations.
Executive Chairman of ECG, John Lau, said “The completion of this transaction with Metcash demonstrates that we are serious about becoming the leader of consumer products export into China, and especially into its regional cities”.
Mr Lau is the founder of Cargo Services Far East, one of the most international logistics service providers based in Greater China with over 9,000 staff in 40 countries.
Thomson Geer’s Matt Reynolds said about the transaction “This was an interesting cross-border transaction for our team that presented a transformational opportunity for our client, ECG, to expand its operations in mainland China under a continuing arrangement with Metcash“.