Midea bids for control of German robot firm Kuka

Midea Group, China's biggest maker of home appliances, has launched a voluntary public tender offer for all shares above its current 13.5 percent stake in Kuka AG, a global technology leader in robotics and automation.

The offer of 4.6 billion euros ($5.16 billion) confirmed Midea's previously stated intention to increase its stake in Kuka to become the biggest shareholder of the German company, ahead of Voith GmbH, maker of industrial equipment.

The offer on June 16 is contingent on an acceptance rate of at least 30 percent of the outstanding shares.

"We want to support Kuka's growth, and we plan to jointly realize the vast growth potential in China, with an aim of increasing our current shareholding to expand the partnership," says Paul Fang, chairman and CEO of Midea.

According to Midea, the German Federal Financial Supervisory Authority has approved the publication of the offer document while the shareholders' general meeting of the Chinese company has already approved the transaction plan.

The publication of the offer document marked the beginning of the acceptance period of the tender offer, which ends on July 15, according to Midea, which is based in Foshan, Guangdong province.

"Cutting-edge technology from Germany and Midea's long-term experience and network in the Chinese market will allow us to benefit from the growth opportunities across different industries in China," Fang says.

One area of key strategic focus for Kuka is the broader robotics market in China, an area in which Midea also sees sustainable growth opportunities, he adds.

According to an industrial report by Midea, China is continuously seeking ways to automate its factories as rising labor costs reduce the country's cost advantage. However, robot penetration in general industries remains extremely low, at about 17 units per 10,000 workers.

"The partnership will expand Kuka's product offerings and customer base in China, especially in the Pearl River Delta region, a major manufacturing and industrial base in South China," says Lin Jiang, a professor at Sun Yat-sen University.

A larger shareholding in Kuka will also help the companies increase exposure to general industry in China through Midea's network, realize efficiencies in supply chains, and grow the service robotics business in the consumer segment, Lin says.

In addition to its market share of 35 percent in North America and 46 percent in Europe, Kuka also has a 19 percent market share in Asia and other regions, according to the Midea report. The company had about 3 billion euros in revenue last year.

The Augsburg-based company has expanded its Asian presence in recent years, with a factory established in Shanghai in 2013. It already provides hundreds of products to automate Midea's factories. By 2020, Kuka said that it plans sales of 1 billion euros in China.

qiuyuanlin@chinadaily.com.cn

(China Daily European Weekly 06/24/2016 page30)