China’s Midea to Become Largest Investor in Germany’s Kuka

1467592599_kuka

Attendees inspect a robotic arm at the Kuka exhibition stand during the Automatica trade fair in Munich.

Photographer: Martin Leissl/Bloomberg
  • Midea to acquire 25.1 percent stake from Voith in tender
  • Investor Friedhelm Loh to also sell stake, Handelsblatt says

China’s Midea Group Co. will become Kuka AG’s largest shareholder after buying a 25 percent stake in the German robot maker from investor Voith GmbH as part of a deal that’s been closely scrutinized by lawmakers.

Voith will get about 1.2 billion euros ($1.3 billion) by selling its stake, the closely held company said in a statement on Sunday. Kuka’s third-biggest shareholder, Friedhelm Loh, has also decided to sell his shares to Midea, newspaper Handelsblatt reported on Monday, citing Loh. The combined purchases would take the Chinese company’s shareholding to just under 50 percent, well above the 30 percent it was seeking as part of the tender offer.

Loh and spokespeople for Kuka weren’t immediately available to comment.

The prospect of Kuka being taken over by a Chinese buyer has triggered concerns from leading politicians in Chancellor Angela Merkel’s government. Economy Minister Sigmar Gabriel is leading a charge to find an alternative bid from a European suitor, a search that’s so far failed to produce an offer. To help allay fears surrounding its approach, Midea has said it won’t pursue a domination agreement or de-listing of the shares.

Jobs Assurances

The offer from Midea, China’s biggest appliance manufacturer, is open for four weeks from when it was published June 16. It was backed by Kuka Chief Executive Officer Till Reuter after the Chinese company offered assurances that jobs and plants will be protected until the end of 2023.

Midea, which said on May 18 it had a 13.5 percent stake in Kuka, is offering 115 euros a share. It has pledged to help the company beat a 2020 sales target by expanding its product offerings to take advantage of the Chinese market as well as expanding into household robots.

Kuka shares gained 0.1 percent to 106.80 euros at 1:57 p.m. in Frankfurt trading. The stock is up about 27 percent since the deal with Midea was announced May 18. Midea shares rose 1.5 percent to 24.45 yuan in Shenzhen trading Monday.

Midea wants to transform its manufacturing line with robot technology and is aiming to cut its workforce by a fifth to 80,000 by 2018, Midea Chairman Paul Fang said in an interview in May. The company already has 100 Kuka robots in its factories. With $10.7 billion in free cash, Midea could do more acquisitions, although it intends to focus on expanding its brand in Europe and America, Fang said.

Voith, among the biggest family owned businesses in Europe, acquired its Kuka stake in late 2014 for less than half the amount it expects to receive. The German company said at the time that it wanted to take advantage of the trend toward increased industrial automation.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE