--- SEARCH ---
WEATHER
CHINA
INTERNATIONAL
BUSINESS
CULTURE
GOVERNMENT
SCI-TECH
ENVIRONMENT
SPORTS
LIFE
PEOPLE
TRAVEL
WEEKLY REVIEW
Film in China
War on Poverty
Learning Chinese
Learn to Cook Chinese Dishes
Exchange Rates
Hotel Service
China Calendar
Trade & Foreign Investment

Hot Links
China Development Gateway
Chinese Embassies

Hisense Grabs Kelon in White-hot Bidding War

Hisense, one of China's leading white goods manufacturers, has signed an agreement with Kelon's chairman, and bought a 26.43 percent stake at the cost of 900 million yuan (US$111 million), Xinhua News agency has reported, citing a top managerial source. 

Gu Chujun, the chairman of Beijing-based Greencool, as well as Guangdong Kelon Electrical Holdings Co, agreed to transfer Greencool's stake in Kelon to Hisense on Friday, the top manager disclosed.

Despite corporate scandals, dubious dealings, plunging sales and millions reportedly embezzled, a number of investors lined up to take control of crisis-ridden Kelon, the renowned maker of refrigerators and air-conditioners.

A dozen leading electrical appliance firms from home and abroad including Hisense, Midea and Electrolux have been queuing up to take over Kelon. Hisense finally won out.

"It is really a good buy," said Dong Chen, an analyst with China Securities. "Its brand name and marketing channels are particularly attractive to potential buyers, especially in the electrical appliance industry, where competition is red-hot."

More importantly, Kelon fell into dire straits not because of its product line or marketing skills but because of its controversial chairman, Gu Chujun, who was detained in early August on suspicion of economic scandals. Five of its senior executives are also being held.

Dong says: "Kelon is a good company, but it chose a bad investor."

After Gu acquired 26.43 percent of Kelon to become its controlling shareholder in 2001, he allegedly began to embezzle Kelon's capital to fuel his merger-and-acquisition spree, resulting in a cash drain and production setbacks.

According to Dong, 900 million yuan (US$111 million) is a good price.

Greencool, Kelon's largest shareholder, has a 26.43 percent stake in Kelon, with 262 million shares.

Kelon's A shares traded on Friday at 2.78 yuan (34 US cents). This means Greencool has 728 million yuan (US$98.8 million) worth of Kelon shares, lower than Hisense's acquisition price.

A top manager at Hisense says there are various reasons for the comparatively high price.

"Hisense wants to make a breakthrough in refrigerator and air-conditioner manufacturing both of which are Kelon's strong points," he told China Daily. "Besides, Kelon is a household name and has quality assets."

Moreover, for Hisense, as a Shandong-based company, taking over Kelon could strengthen its presence in South China.

Hisense, which started out as a maker of black goods such as TV sets, has recently turned its attention to the white-goods business. However, it has only two air-conditioner production lines in Qingdao, East China's Shandong Province, and Huzhou, east China's Zheijiang Province.

After its acquisition of Beijing Xuehua Refrigerator and Nanjing Bole Refrigerator in the past two years, it owns two refrigerator production lines.

Its total production capacity is far from enough, especially in south China.

"After Hisense takes over Kelon's large-scale production line in Guangdong and capitalizes on its purchase, distribution and export strengths, Hisense's white goods will become China's market leaders very quickly indeed," said Zhu Shuqin, director of Hisense brand marketing department.

(China Daily September 12, 2005)

Kelon to Resupply Beijing Market
Kelon Says Board Dismisses Chairman
CSRC: Kelon Chief Did Wrong
Kelon: Production to Be Resumed in Mid August
Kelon's Future at Stake After Chairman's Detention
6 Senior Executives of Kelon Detained
Chairman of Kelon in Custody
Print This Page
|
Email This Page
About Us SiteMap Feedback
Copyright © China Internet Information Center. All Rights Reserved
E-mail: webmaster@china.org.cn Tel: 86-10-68326688