China's Midea Group to Disclose Bid for Germany's Kuka
May 17 2016 - 1:20PM
Dow Jones News
China's home appliances maker Midea Group is close to disclosing
a takeover offer for German industrial robot maker Kuka AG,
according to people familiar with the matter, a move that could
become one of the largest unsolicited approaches of a foreign
company by a Chinese buyer.
Based in Southern China's Guangdong province, Midea could
announce its offer for Kuka as early as Wednesday, two of these
people said, adding it is prepared to pay a 30% premium to Kuka's
three-month average share price.
Such an offer would value Kuka at roughly €4.4 billion ($5
billion).
One person familiar with the matter said that Midea is looking
at increasing its stake to above 30%, but doesn't necessarily seek
to gain more than 50% or buy Kuka altogether.
Midea couldn't be reached for comment late Tuesday, while a
spokeswoman for Kuka declined to comment.
Midea Group increased its stake in Kuka in February to 10.2%,
making it the Ausburg-based company's current second largest
shareholder.
Founded in 1968, Midea Group owns some of China's top
air-conditioner, refrigerator and washing machine brands. The
Shenzhen-listed company increased its overseas activity in the past
year. It announced a deal in March to acquire a controlling stake
in Japanese conglomerate Toshiba Group's consumer-electronics arm
for about $473 million, after losing out in the bidding race for
General Electronics Co.'s appliances unit earlier this year,
according to people with knowledge of the matter. GE sold the
business to another Chinese company, Haier Group for $5.4
billion.
Midea reported a net profit of 3.9 billion yuan ($598 million)
in the first quarter.
Founded in 1898 in Southern Germany, Kuka is one of Germany's
leading companies focused on the digitization of industrial
manufacturing processes, also known as the fourth industrial
revolution.
The trend of creating fully automated and networked production
facilities that put together cars or machines with little human
help is one of German Chancellor Angela Merkel's favorite
topics.
Kuka's operations fit well with China's current growth plan that
includes acquiring foreign companies in sectors like robotics. More
than half of Kuka's revenues of €3 billion last year came from the
U.S. and China.
For Kuka, stronger ties to Midea could help to increase revenues
in China, one of the cornerstones in the company's growth strategy.
Kuka aims at roughly double its revenue to between €4 billion to
€4.5 billion by 2020, compared with 2014.
Midea first bought a 5.4% stake in Kuka in August 2015. A buyout
of Kuka, should Midea opt to do so at a later point, could be
complicated given the company's shareholder structure. German
privately held engineering company Voith Group holds 25% in Kuka,
with another 10% being held by German billionaire Friedhelm Loh via
his holding company.
Write to Kane Wu at Kane.Wu@wsj.com and Eyk Henning at
eyk.henning@wsj.com
(END) Dow Jones Newswires
May 17, 2016 13:05 ET (17:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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