Companies have signed memorandum of understanding.
China’s biggest maker of home appliances, the Midea Group is buying a majority stake in Toshiba Corporation. Under the envisaged agreement and upon completion of the transaction, Toshiba will continue to develop, manufacture and market white goods, such as refrigerators, washing machines, vacuum cleaners and other small domestic appliances under the Toshiba brand name.
In a statement, Toshiba said the two companies have signed a memorandum of understanding and, although the financials are undisclosed, the Nikkei newspaper has reported last week that the deal is possibly worth tens of billions of yen.
Toshiba explained that over 20 years, Toshiba and Midea have both built up a strong relationship in a number of areas, including compressors, small domestic appliances and inverters.
“This proposed transaction will further cement and enhance the collaboration of two leading players with extensive expertise to create increased immediate and long term values for consumers, business partners, employees and shareholders,” the company said.
Toshiba added that the parties will continue discussions in good faith, “towards a definitive agreement that is expected to befinalized by the end of this month.”
Midea, is based in the southern Chinese city of Foshan, and has been seeking acquisition targets as part of its global expansion plan, Vice President Yuan Liqun (pictured) said on March 13.
It’s seeking deals that can help it improve its technology, brand and global distribution channels so it can become more competitive, and the manufacturer has about 70 billion yuan ($10.8 billion) in cash and notes receivable, she said.
Midea joins competitors including China’s Haier Group Corp. in seeking technology through overseas acquisitions. Midea had a 17.1% market share in 2015, followed by Qingdao Haier with 7.9%, Euromonitor International data show.
Midea shares rose 2% at the close in Shenzhen trading Thursday, easing the decline so far this year to 9%.