LOS ANGELES – Residential furniture manufacturer and distributor Nova LifeStyle Inc (NASDAQ:NVFY) has signed a share transfer agreement to sell its China-based subsidiary NOVA BVI to Kuka Design Ltd. for $8.5 million. Nova BVI consists of the company’s manufacturing operations in mainland China.
The deal has more than doubled Nova's stock. Early in the week, its stock, at $3.63 per share, was up 26 percent.
Nova said that it chose to sell its BVI subsidiary because of the slow-down of the Chinese economy and the resulting increase in labor and manufacturing costs in China. Transitioning to a “light-asset” business model allowed Nova to focus more on its operations in North America.
Nova CEO Jeffrey Wong said, "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.”
Kuka Design sells leather upholstery and dining furniture in North America.