The KUKA acquisition case ended successfully and began to dig deep into the Chinese robot market.

At the end of December 2016, the US Foreign Investment Committee and the State Department's Defense Trade Control Office approved Midea's acquisition of KUKA. The acquisition, which lasted more than seven months, finally came to an end. Midea will cooperate with the library to help KUKA seize the opportunities in the robot market in China and other regions, and further expand investment.  

The KUKA acquisition case ended successfully. Midea began to dig deep into the Chinese robot market.

The KUKA acquisition case ended successfully. Midea began to dig deep into the Chinese robot market.

On December 30, 2016, Midea Group announced that the tender offer for the German KUKA Group has been approved by all relevant regulatory authorities to meet all regulatory conditions. In addition, the company will acquire a total of 94.55% of the issued share capital of KUKA and the existing voting rights. The delivery of related assets will be completed in early January 2017.

In this regard, the chairman and president of the United States Fang Hongbo said: "We are very pleased to have completed the final 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 supervisory board. We look forward to working together to help KUKA seize opportunities in the robotics market in China and other regions and further expand investment."

Finalized in the United States

Looking back at the history of this merger, it is the largest foreign acquisition since the establishment of the United States.

On May 18, 2016, Midea Group officially announced a comprehensive tender offer to KUKA for a price of 115 euros per share. The company expects that if the KUKA other shareholders except MECCA (a subsidiary of Midea Group) accept the offer, the total purchase price will be approximately RMB 29.2 billion. Midea Group's minimum intention shareholding ratio is more than 30% (including 13.51% held by MECCA), but emphasizes that the acquisition is not for the purpose of delisting from KUKA Group.

The acquisition is subject to a number of process approvals, including approval by the German Federal Financial Supervisory Authority, no objection from the German Federal Ministry of Economic Affairs and Energy, antitrust review in China, the European Union, the United States, Russia, Brazil, Mexico and other regions or other Have the consent of the government department (if needed).

At the beginning of the acquisition, the Germans had blocked the news that the US group had acquired KUKA. Some officials, including the German economic minister, even called for other acquisition targets in Europe to participate in the bid. However, with the approval of the tender for the German Federal Financial Supervisory Authority on June 15, the market’s concerns were resolved.

However, from the follow-up approval process, the longest time is the approval from the US. As of October 13, 2016, the acquisition has already met the delivery conditions of anti-monopoly review in China, the United States, Russia, Brazil, Mexico, the European Union, etc., but the final level is from the US Foreign Investment Committee (CFIUS). And the Defense Trade Control Council (DDTC) review.

Why does a Chinese company’s acquisition of a German company need to be reviewed by multiple US departments? Some analysts believe that because KUKA is a global multinational listed company, it has subsidiaries and businesses in the United States. Especially for the mergers and acquisitions of Chinese companies, the US authorities have special considerations in national security. Previously, the US Foreign Investment Committee had repeatedly rejected Chinese companies' investment in the United States, such as preventing Philips from selling its LED business to the Chinese team in early 2016.

However, at the end of December 2016, the US Foreign Investment Committee and the State Council Defense Trade Controls Office approved the US acquisition of KUKA. The merger, which lasted more than seven months, finally ended in the United States under the release of the United States.

Subsequent integration is a test

According to the plan of the United States, the acquisition will complete the asset delivery in early January 2017. According to the final purchase result of 94.55%, the total amount of the acquisition of Midea Group will be slightly less than RMB 29.2 billion. The source of the acquisition fund is the syndicated loan. And the company's own funds.

Although the majority of KUKA shares were obtained in one fell swoop, Midea Group promised to maintain KUKA's independence at the time of merger and acquisition, including not only maintaining the stability of KUKA Group management and core technical personnel, but also fully supporting KUKA's current business strategy. , talent base and brand development, while still maintaining KUKA's listing status on the Frankfurt Stock Exchange.

In response to the German government's concern about the outflow of corporate secret technology, the "Investment Agreement" signed by Midea and KUKA on June 28, a total of five articles, did not involve technology transfer, but instead emphasized respect for the KUKA brand and intellectual property, such as "preparation Establish a segregation prevention agreement to keep the KUKA Group's trade secrets and customer data confidential to maintain a stable relationship between KUKA and its customers and suppliers.

The acquisition of KUKA for a perfect ending is certainly worthy of joy. But the test of beauty is not just the acquisition itself, but also the integration after the acquisition. According to the 2016 Corporate Overseas Financial Risk Management Report released by the China Enterprise Internationalization Overseas Risk Management Forum, the efficiency of Chinese M&A overseas mergers and acquisitions is only 1/3, and the weighted cross-border and cross-cultural integration factors are less than 20% overseas. M&A can be truly successful.

Guo Fanli, research director of China Investment Consulting, is full of confidence. He told the Securities Times reporter that in addition to emphasizing that it will strive to maintain the independence of KUKA, Midea also made it clear that it will not promote the change of the number of existing global employees, the closure of the base or any relocation, KUKA's independence eased two The difficulty of large enterprise integration.

Digging deep into the Chinese robot market

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

Obviously, the Chinese robot market is an important focus of this acquisition. As early as 2010, Midea's Home Air Conditioning Division has applied various types of three-axis and four-axis robots in various workshops. Since 2012, Midea has invested nearly 1,000 robots, and the automation transformation is expected to invest about 5 billion yuan. Midea Group itself is the “big buyer” of robots.

However, the technological gap between Chinese robotics and robot core components is also obvious. At present, most of the core components of the domestic robot industry still rely on imports. Through the acquisition of KUKA, Midea will undoubtedly quickly fill the technical shortcomings. A small video called "The KUKA robot has many cows" spreads widely on the network. A KUKA robot can perform many complicated and delicate operations, while ensuring the safety of the operator to a considerable extent.

Pan Wei, a senior analyst at the OFweek Industry Research Center, pointed out that if the KUKA is successfully incorporated, the joint development of the Chinese robot market will be ranked as the top priority, and the US home appliance factory has the need to increase the density of robots and automate production efficiency. Last year, Midea cooperated with Yaskawa Electric's wholly-owned subsidiary in China to form two joint venture robot companies. One of its main tasks is to diagnose the production line of the US factory and study how to use robots to help the production line complete automation.

Guo Fanli also believes that KUKA will enable Midea to quickly acquire technological advantages in the field of industrial robots and automated production. Midea's manufacturing base is spread all over China, and the cooperation with KUKA is bound to make KUKA a tiger, which can effectively assist KUKA to rapidly expand its business in China.

On the other hand, at the distribution level, Midea will support KUKA through its existing network, helping KUKA to rapidly expand its customer base. KUKA can learn from the automation experience of its own industry in the field, and take the lead in realizing the penetration of robots to other famous manufacturers in the general industrial field in China. “The United States has close relationships with many large companies in the general industrial sector in China and will spare no effort to support KUKA in establishing its own network of relationships.”

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