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.

Have something to say? Share your thoughts with us in the comments below.