The most popular acquisition of KUKA makes a trip,

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Midea's acquisition of KUKA: China's robot market will welcome heavyweight players. On December 30, 2016, Midea Group announced that its tender offer to Germany's KUKA group had been approved by all relevant regulatory authorities and met all regulatory conditions. In addition to the KUKA shares indirectly held by the company before the tender offer, the company will acquire 94.55% of the issued share capital and existing voting rights of KUKA in total. The delivery of relevant assets will be completed in early January 2017

in response, Fang Hongbo, chairman and President of Midea, said: we are glad to have completed the last step of deepening cooperation with KUKA. We attach great importance to KUKA's advantages in all products and services and its commitment to exploring innovative intelligent solutions. Midea will work closely with KUKA's outstanding management team and the board of supervisors. We look forward to working together to help KUKA seize the opportunities of the robot market in China and other regions and further expand investment

was finally released by the United States

reviewing the process of this M & A, it can be called the largest external acquisition of Midea since its establishment

on May 18, 2016, Midea Group officially announced that it had issued a comprehensive tender offer to KUKA at a price of 115 euros per share. The company estimates that if all other shareholders of KUKA except Mecca (a subsidiary of Midea Group) accept the offer, the total price of lubricant added to the acquisition will be about 29.2 billion yuan. Midea Group's minimum intended shareholding ratio is more than 30% (including 13.51% held by Mecca), but it is emphasized that this acquisition is not for the purpose of delisting KUKA group

this acquisition needs to go through a number of procedures for approval, including the approval of the German federal financial regulatory authority, no objection from the German Federal Ministry of economic affairs and energy, anti-monopoly review in China, the European Union, the United States, Russia, Brazil, Mexico and other regions or the consent of other competent government departments (if necessary)

at the beginning of the acquisition, there was a news in the market that Germany blocked Midea Group from acquiring KUKA. Some officials, including the German Minister of economy, even called for other acquisition targets in Europe to participate in the bidding. However, with the approval of the tender offer documents by the German federal financial regulatory authority on June 15, this concern of the market was resolved

however, from the subsequent approval process, the longest time-consuming approval came from the United States. As of october13,2016, this acquisition has successively met the delivery conditions for antitrust review in China, the United States, Russia, Brazil, Mexico, the European Union and other regions, but the last hurdle is from the review of the U.S. Commission on foreign investment (CFIUS) and the Defense Trade Control Council (DDTC)

why does the acquisition of a German enterprise by a Chinese enterprise need to be reviewed by multiple US departments? Analysts believe that because KUKA is a global multinational listed company, it has subsidiaries and businesses in the United States. Especially for mergers and acquisitions of Chinese enterprises, the US authorities have special considerations on national security. Previously, the Committee on foreign investment in the United States had repeatedly rejected Chinese companies' investment in the United States, such as preventing Philips from selling its led business to Chinese funded teams in early 2016

however, at the end of December 2016, the Committee on foreign investment in the United States and the Defense Trade Control Office of the State Council approved Midea's acquisition of KUKA. The acquisition, which lasted more than 7 months, finally came to a successful conclusion with the release of the United States

subsequent integration is the test

according to Midea's plan, this acquisition will complete the asset delivery in early January 2017. According to the tender offer result of holding 94.55% of the ultimate shares, the total acquisition amount of Midea Group will be slightly less than 29.2 billion yuan. The acquisition funds come from syndicated loans and the company's own funds

although Midea Group acquired most of the shares of KUKA at one fell swoop, it promised to maintain the independence of KUKA at the place of merger and acquisition, including not only maintaining the stability of the management and core technical personnel of KUKA group, but also fully supporting KUKA's current business strategy, talent base and brand development, and maintaining the listing status of KUKA on the Frankfurt Stock Exchange of Germany

in response to the German government's concern about the outflow of enterprise confidential technology, Midea and KUKA signed an investment agreement on June 28, which contained five articles. None of them involved technology transfer. Instead, they emphasized respect for KUKA's brand and intellectual property rights. For example, they were prepared to enter into an isolation and prevention agreement to keep the business secrets and customer data of KUKA group confidential, so as to maintain the stable relationship between KUKA and its customers and suppliers

it is certainly gratifying that the acquisition of KUKA has achieved a perfect outcome. However, the test of Midea is not only the acquisition itself, but also the integration after the purchase of green technology equipment. According to the 2016 enterprise overseas financial risk management report released by the international overseas risk management forum of Chinese enterprises, the effectiveness rate of Chinese enterprises' overseas M & A is only 1/3. Weighted by cross-border and cross-cultural integration factors, less than 20% of overseas M & A can be truly successful

guofanli, research director of CIC, is full of confidence. He told the securities times that Midea not only emphasized that it would strive to maintain the independence of KUKA, but also made it clear that it would not promote the change of the number of existing global employees, the closure of bases or any relocation. KUKA's independence eased the difficulty of the integration of the two major enterprises

dig deep into China's robot market

according to Fang Hongbo's plan, Midea will cooperate with KUKA to help KUKA grasp the opportunities in China and other regions' robot market and further expand investment

obviously, the Chinese robot market is an important focus of this M & A. As early as 2010, Midea household air conditioning Division has widely used various three-axis and four axis robots in various workshops. Since 2012, Midea has put nearly a thousand robots into use, and is expected to invest about 5billion yuan in automation transformation. Midea Group itself is a big buyer of robots

however, the technological gap between Chinese robot enterprises in the core parts of robots is also obvious. At present, most of the core parts of the domestic robot industry are zero. However, due to the differences in the range of plastic shrinkage and stability, parts still rely on imports. Through the acquisition of KUKA, Midea will undoubtedly quickly fill the technical weakness. A small video called KUKA robot is very popular. A KUKA robot can complete many complex and delicate operations and ensure the safety of operators to a certain extent

Pan Wei, a senior analyst, pointed out that if the company successfully entered KUKA, it would be the first priority to jointly develop the Chinese robot market. Midea's home appliance factory has the demand to improve the robot density and automatic production efficiency. Last year, Midea cooperated with the wholly-owned subsidiary of Yaskawa electric in China to establish two joint venture robot enterprises. One of its main tasks is to diagnose the production line of Midea factory and study how to use robots to help the production line complete automation

guofanli also believes that KUKA will enable Midea to quickly gain technical advantages in the field of industrial robots and automated production. Midea's manufacturing bases are all over China. The cooperation with KUKA is bound to make KUKA like a tiger, which can effectively help KUKA expand its business in China

on the other hand, at the distribution level, Midea will provide support to KUKA through its existing network to help KUKA rapidly expand its customer base. KUKA can learn from Midea's automation experience in its own industrial field and take the lead in infiltrating robots into other famous manufacturers in China's general industrial field. Midea has close relations with many large companies in China's general industrial fields and will spare no effort to support KUKA in establishing its own relations

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