Foshan, Guangdong – Chinese appliance maker Midea has bought an 80.1% stake in Japan's Toshiba's Lifestyle Products & Services Corporation for JPY 53.7bn ($496m).
The sale includes rights to 5,000 of Toshiba's intellectual property assets and is subject to regulatory approval in China and Japan, according to Midea’s statement.
It also stipulates that Midea will take over the unit’s JPY 25bn debt to Toshiba with repayment upon closing, expected in June at the earliest.
If the transaction goes through, Midea will be granted license for the use of the Toshiba brand globally for such appliances over a period of 40 years. Midea will also receive and be licensed to use Toshiba’s over-5,000 home appliance related intellectual property rights. Toshiba’s patents for refrigerator insulation panels in particular will significantly benefit Midea, said the statement.
“Midea and Toshiba have more than 20 years’ successful cooperation in various areas,” said Masashi Muromachi, representative executive officer, president and ceo of Toshiba. “We are impressed by Midea’s focus on globalisation, strong product development capabilities, extensive global distribution network and commitment to high quality.”
In the fiscal year ended 31 March 2015, Toshiba’s white goods unit sold 8.5m home appliances, including 2.3m refrigerators that brought in JPY 107bn sales or 26% of the unit’s total revenue. The third largest refrigerator seller in Japan with a 15.3% market share, the company also has strong presence in Southeast Asia and the Middle East.
“The unit’s plants in China and Thailand could still have higher capacity utilisation, and it’s mutually complementary with Midea’s complete supply chain systems and experience in scale production,” the statement said.
Against a domestic downturn and global depression, Midea’s refrigerator business in the fiscal year ended 31 December 2015 jumped 17.5% to CNY 11.4bn, accounting for 8.3% of its total revenue. Its overall appliances sales in several overseas markets including East and Central Africa, ASEAN and India rose by more than 20%.
XE Currency Conversion: 11 April, 2016