Midea makes ‘smart’ move with KUKA

White goods maker takes big­ger stake in Ger­man tech firm

China Daily (Canada) - - LIFE - By QIUQUANLIN in Guangzhou qiuquanlin@chi­nadaily.com.cn

A larger share­hold­ing in KUKA AG, a lead­ing global sup­plier of in­tel­li­gent au­to­ma­tion so­lu­tions, will help fa­cil­i­tate the “smart” strat­egy of Midea Group, one of China’s lead­ing in­dus­trial groups in con­sumer ap­pli­ances, heat­ing, ven­ti­la­tion and air-con­di­tion­ing sys­tems, ac­cord­ing to a top ex­ec­u­tive of the Chi­nese com­pany.

Midea, based in Guang­dong prov­ince, an eco­nomic pow­er­house in south­ern China, an­nounced on Wed­nes­day it had pre­pared to ex­pand its share­hold­ing in KUKA in a deal that val­ues the Ger­man com­pany at 4.6 bil­lion eu­ros ($5.2 bil­lion).

Cur­rently, Midea in­di­rectly owns 13.5 per­cent of KUKA’s share. The vol­un­tary takeover of­fer will be con­ducted by Midea’s af­fil­i­ate MECCA In­ter­na­tional Lim­ited, at 115 eu­ros in cash per share.

“As a cus­tomer and in­vestor, we have been im­pressed by KUKA’s man­age­ment and em­ploy­ees and have had con­struc­tive di­a­logue since build­ing our ini­tial stake in the com­pany,” said Paul Fang, chair­man and chief ex­ec­u­tive of­fi­cer of Midea, af­ter the an­nounce­ment.

Ac­cord­ing to Fang, theChi­nese home ap­pli­ances maker would like to have a mean­ing­ful stake in KUKA above 30 per­cent, mak­ing Midea the big­gest share­holder, ahead of Ger­many’s Voith, a maker of in­dus­trial equip­ment.

“We have no in­ten­tion of con­clud­ing a dom­i­na­tion agree­ment or delist­ing the Ger­man com­pany,” said Fang.

In line with the ap­pli­ca­ble reg­u­la­tory frame­work, the in­crease of the share­hold­ing re­quires an of­fer for all is­sued shares in KUKA AG, ac­cord­ing to the Midea.

Trad­ing of Midea’s shares was sus­pended in the Shen­zhen Stock Ex­change on Wed­nes­day, while KUKA shares jumped 33 per­cent to 112.60 eu­ros in Frankfurt at around 9 am, ac­cord­ing to Bloomberg.

“We are com­mit­ted to in­vest­ing in KUKA’s em­ploy­ees, brand, in­tel­lec­tual prop­erty and fa­cil­i­ties to fur­ther sup­port the com­pany’s de­vel­op­ment, es­pe­cially in the Chi­nese mar­ket,” said Fang.

The in­tended of­fer is in line with Midea’s “smart” strat­egy, which was launched in 2015 and aimed to up­grade the largest Chi­nese home ap­pli­ances maker’s man­u­fac­tur­ing com­pe­ten­cies and de­velop more smart home de­vices, ac­cord­ing to Fang.

“We be­lieve that a larger share­hold­ing strikes the right bal­ance be­tween an in­de­pen­dent KUKA while also putting both com­pa­nies in a po­si­tion to drive fur­ther growth through col­lab­o­ra­tion,” said Fang.

One of KUKA’s key strate­gic fo­cus ar­eas is the broader robotics mar­ket in China, an area in whichMidea also sees sub­stan­tial growth op­por­tu­ni­ties driven by ris­ing la­bor costs and an ag­ing pop­u­la­tion, ac­cord­ing to Fang.

KUKA has al­ready ex­panded its Asian pres­ence in re­cent years, with a fac­tory be­ing es­tab­lished in Shang­hai in 2013 and al­ready hav­ing helped Midea to au­to­mate its fac­to­ries.

By 2020, KUKA plans to grow sales to 1 bil­lion eu­ros in China, ac­cord­ing to the Ger­man com­pany sources.

Lin Jiang, a pro­fes­sor at the Guangzhou-based Sun Yat-sen Univer­sity, said Midea’s in­creased share­hold­ings in KUKA would help bring more au­to­ma­tion and smart so­lu­tions for tra­di­tional man­u­fac­tur­ing in the Pearl River Delta.

“It (the takeover of­fer) would not only ben­e­fit Midea, but also the en­tire man­u­fac­tur­ing in­dus­try in the Delta, as the re­gions is un­der­go­ing a reshuf­fle in in­dus­trial re­con­struc­tion,” said Lin.

We have no in­ten­tion of con­clud­ing a dom­i­na­tion agree­ment or delist­ing the Ger­man com­pany.”

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.