Hong Kong Retailer I.T to Go Private in $168 Million Deal

Eric Lam, Bloomberg News

Pedestrians walk along Russell Street in the Causeway Bay district of Hong Kong, China, on Thursday, Aug. 29, 2019. Whether it's glitzy shops in Central or decades-old family businesses along the city's winding streets, retailers of all levels across Hong Kong these days find themselves struggling in much the same way. Photographer: Chan Long Hei/Bloomberg , Bloomberg

(Bloomberg) -- Hong Kong fashion retailer I.T Ltd. agreed to go private in a cash deal worth about HK$1.3 billion ($168 million) with its business decimated by the pandemic and a shift to online retailing.

The deal, which is backed by private equity firm CVC Capital Partners, will see non-founder shares bought at HK$3 a piece in cash, according to a Hong Kong stock exchange filing. That’s about a 55% premium to the stock’s last closing price, the filing said. As part of the proposal, the founders will retain about 51% ownership, with CVC owning the remainder.

The company cited challenging market conditions, including a digital disruption to the retail industry and the Covid-19 outbreak as reasons for agreeing to the deal.

“These factors require the company to re-strategise, undertake a deeper business transformation and restructure in order to achieve long-term sustainable growth,” the filing said.

The retailer’s outlets also became targets in protests earlier this year because of a perceived pro-Beijing stance of one of its founders.

I.T has applied for a resumption of trading in Hong Kong on Monday. Shares had been halted Nov. 30 pending the announcement.

The deal is still subject to shareholder approval.

Morgan Stanley is advising the offeror.

(Adds details on ownership structure in second paragraph.)