Yoshitsu (NASDAQ:TKLF) just disclosed it has agreed to acquire Tokyo Lifestyle Limited. The purpose of this is to accelerate Yoshitsu’s business expansion in Southeast Asia and to advance the company’s digital transformation. Traders have responded by sending TKLF stock about 50% higher earlier today.
Until today, you might never have even heard of Yoshitsu. Yet, the company does big business in Japan as a retailer and wholesaler of beauty and health products. From cosmetics and fragrances to nutritional supplements and home goods, Yoshitsu offers a broad variety of products.
Currently, Yoshitsu sells its products through directly-operated physical stores and well as through online stores. The company also sells to franchise stores and wholesale customers. However, Yoshitsu has larger ambitions. Evidently, the company seeks to expand its business operations in Southeast Asia and become a power player in e-commerce.
Easier said than done, right? Still, Yoshitsu is being proactive, as the company will acquire 100% of the equity interests in Tokyo Lifestyle Limited. The company imports Japanese beauty and cosmetic products in Hong Kong and participates in the live e-commerce sector through its subsidiary, Shenzhen Qingzhiliangpin Network Technology.
What’s Happening With TKLF Stock?
There’s no denying that Wall Street likes the idea of Yoshitsu buying out Tokyo Lifestyle Limited. Today, TKLF stock skyrocketed, quickly adding 50% to its value and breaking above $2.
Granted, the acquisition comes at a hefty cost. Specifically, Yoshitsu will pay 392 million Japanese yen in cash, or approximately $2.8 million, to acquire Tokyo Lifestyle Limited. Some investors might wonder whether the company is worth the cost.
Yoshitsu Principal Executive Officer Mei Kanayama is clearly confident about the buyout and its value to the company, however. Indeed, Kanayama expects Tokyo Lifestyle Limited will help Yoshitsu improve its operational efficiency and “establish a solid foundation in Hong Kong to develop the Southeast Asian market further and strengthen our brand awareness in the region.”
Thus, the stakes are high, but TKLF stock holders are wagering that the potential rewards are considerable. In due time, Yoshitsu could become a household name, not only in Japan but on Wall Street as well.
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On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.