China Old-established Brand LONKEY to Divest Daily Chemical Business
- Chaileedo Press
- May 15, 2023
- 2 min read
LONKEY, the Chinese old-established cleaning products manufacturer that owns brands such as "Lonkey" and "GFL", announced to divest its daily chemical business by assets exchange with its controlling shareholder Guangzhou Consumer Goods and Services Group Ltd.
Guangzhou LONKEY, an old-established daily chemical enterprise that owns brands such as "LONKEY" and "Gaofuli," announced in a statement that its controlling shareholder, Guangzhou Consumer Goods and Services Group Ltd, plans to exchange no less than 51% of the shares held directly or indirectly by Guangzhou Xinshicheng Enterprise Development Co., Ltd. (referred to as "Xinshicheng") with its daily chemical assets, including the entire share capital of Guangzhou LONKEY Daily Necessities Co., Ltd, Shaoguan LONKEY Co., Ltd and Liaoning LONKEY Industrial Co., Ltd, as well as the 60% equity of Guangzhou Daily Chemical Industry Research Institute Co., Ltd.
LONKEY was founded in 1959 and formerly known as Guangzhou Hard Oil Plant. It is one of the oldest detergent production enterprises in South China. The company’s products include fabric textile care, kitchen cleaning products, home care cleaning products, personal care products and industrial cleaning products.
After the completion of the transaction, Guangzhou LONKEY will hold a controlling stake in Xinshicheng, which operates several creative parks in Guangzhou, including T.I.T Creative Park, where WeChat's headquarters is located. At the same time, Guangzhou LONKEY will completely divest its daily chemical business and focus on food, as well as park development and operation in the future.
It is reported that the specific asset appraisal report was not disclosed in this announcement, and the transaction is still in the preliminary planning stage. The two parties have not yet signed any agreements, and the core elements of the transaction, such as the transaction plan, transaction price, performance commitments, still need further discussion and negotiation. The necessary internal and external related decision-making and approval procedures of the company, the target company, and the transaction counterparty still need to be carried out, and there is a risk that the transaction may not pass such decision-making and approval procedures.
According to the 2022 annual report of Guangzhou LONKEY, the gross profit margin of its daily chemical business was only 9.63%, a decrease of 1.68 percentage points compared to the previous year. This is a significant drop from the gross profit margin of over 22% in 2019.
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