Hisense grabs Kelon in white-hot bidding war
After Gu acquired 26.43 per cent 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 per cent 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.