23 July 2019

KKR-Qingdao Haier deal plugs into mutual benefits

Global investment fund KKR has all the signs of being bullish about China. Shortly after the company struck a US$140 million deal with China Modern Dairy (01117.HK) to farm cattle, KKR agreed to buy a stake in home appliance firm Qingdao Haier (600690.CN).

The private equity investment company will buy 10 percent of Qingdao Haier, a parent firm of Haier Electronics Group (01169.HK), for 3.38 billion yuan (US$553 million), or 11.29 yuan per share on average, representing a discount of 15 percent from the company’s last closing price.

China’s home appliance market has already expanded at neck-breaking pace over the past decades, but penetration of the products is still very low in Chinese homes compared with levels in Japan and the United States.

Taking a stake in China’s top manufacturer of washing machines and fridges will put KKR in a better position to ride the immense demand expected to be unleashed by the national urbanization drive.

In return for placing shares at a double-digit discount and surrendering a seat on the board to KKR, Qingdao Haier can tap into KKR’s capital market and operations expertise.

In the regulatory filing, Qingdao Haier stated clearly that the introduction of KKR as a strategic investor can speed up its brand equity building and expansion overseas.

– Contact the writer at [email protected]



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