Natuzzi S.p.A. (NYSE:NTZ) and Kuka announced that today they have entered into a preliminary agreement to form a joint venture to expand the Natuzzi retail network in Greater China.

“We have known Kuka for many years and have always admired their growth oriented entrepreneurial spirit and approach. This historic partnership will enable Natuzzi and Kuka to become the leading player in the emerging and growing market for branded luxury home furnishings in Greater China.”

Pasquale Natuzzi, Chairman and CEO of Natuzzi S.p.A., said: “We have known Kuka for many years and have always admired their growth oriented entrepreneurial spirit and approach. This historic partnership will enable Natuzzi and Kuka to become the leading player in the emerging and growing market for branded luxury home furnishings in Greater China.”

Jiangsheng Gu, Chairman of Kuka, added: “We have long admired the position and strength that Natuzzi has achieved globally. This is the right product and brand for the new growth we see in the Chinese home furnishing market. By combining Natuzzi’s unparalleled position as the top brand in home furnishings with Kuka’s strong position in China, we as partners will be a force with which to be reckoned in the years to come. We are extremely excited to be taking this unique step with one of the world’s leaders in the industry.”

Subject to certain terms and conditions set forth in the preliminary agreement and to obtaining any applicable authorizations, it is expected that Natuzzi will contribute the exclusive distribution right to perpetually use the Natuzzi Italia and Natuzzi Editions trademarks into a Chinese corporate entity, and that Kuka will invest 65 million Euros to sustain the expansion of the Natuzzi retail network in Greater China. 15 million Euros of Kuka’s investments is in exchange for Natuzzi’s contribution of the right to perpetually use the Natuzzi Italia and Natuzzi Editions trademarks in Greater China, particularly Mainland China, Hong Kong, China SAR and Macao SAR. Natuzzi and Kuka will own 49% and 51%, respectively, of the Chinese corporate entity.

The preliminary agreement also envisages that Natuzzi will contribute its existing stores and commercial organization in China. Further, the joint venture will benefit from Natuzzi’s retail management team who will be employed by the joint venture. It is also expected that the joint venture will operate the existing distribution agreements related to the Natuzzi network of franchised stores. The preliminary agreement also contemplates that Natuzzi will retain the right to use the Natuzzi Italia and Natuzzi Editions trademarks for all manufacturing activities, including in Greater China, and distribution in countries other than Greater China. Additionally, the agreement provides for Natuzzi to supply the joint venture with products at a certain discount.

The parties expect to promptly start the activities to prepare the documentation to implement the partnership. If the parties fail to reach a final agreement by March 31, 2018, the preliminary agreement shall be void.

(Source:businesswire.com)