By Gillian Wong
HONG KONG--Chinese smartphone maker Xiaomi Inc. has invested
1.26 billion yuan ($203.7 million) in local home appliances maker
Midea Group Co., in a deal aimed at boosting its presence in the
market for Internet-connected home electronics.
The investment by Xiaomi, China's biggest smartphone maker by
shipments, gives it a 1.29% stake in Midea, the phone maker said in
a statement late Sunday. Xiaomi said it would acquire 55 million
shares in Midea at 23.01 yuan each, representing a 6.8% discount to
Midea's Friday closing price of 24.70 yuan. Midea, listed on the
Shenzhen stock exchange, makes consumer appliances such as
air-conditioners, washing machines and rice cookers. Midea's shares
were last up 5.5% at 26.05 yuan.
A separate disclosure by Midea on the Shenzhen stock exchange
Monday showed that Xiaomi's founder and chief executive, Lei Jun,
owns 77.8% of Xiaomi and the remaining stake is held by other
shareholders. Midea also disclosed that Xiaomi posted a net profit
of 3.5 billion yuan on revenue of 26.5 billion yuan in 2013. The
Wall Street Journal first reported in November that privately held
Xiaomi's profit nearly doubled in 2013, citing confidential
documents.
Xiaomi has grown in just over four years to become the
top-selling smartphone vendor in China in the third quarter, and
among the world's largest. Its success at home has been driven by
its strategy of selling smartphones with features to rival the best
handsets of Samsung Electronics Co. and Apple Inc., but at around a
third of the price. Xiaomi has said it saves on costs by selling
its devices online and adopting inexpensive marketing tactics such
as using social media.
Xiaomi has been investing in so-called 'smart' hardware
companies, including Misfit Wearables Corp., a San Francisco
startup that makes wearable fitness trackers.
Xiaomi said the latest Midea deal allows the two companies to
cooperate in "smart home initiatives and electronic products." It
didn't go into specifics, but the investment is seen as being part
of Xiaomi's push into home appliances that are connected to the
Internet. Xiaomi will start selling an air purifier in mainland
China from Tuesday, with preorders for the product taken last week,
the company said. The air purifier will be able to connect to
wireless networks and be remotely controlled by smartphones,
allowing users to monitor the air quality in real-time, the company
says.
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