Midea (000333. SZ), a $58 billion Chinese white goods giant, purchased German robot producer Kuka for over $5 billion in 2016. Seven years later, the business is considering Sweden’s Electrolux (ELUXb.ST), a complementary asset valued at $7 billion, including debt. After offshore deals hit a historic low of $29 billion in 2022, EY estimates that a successful tilt could revive Chinese outbound M&A.
Bloomberg stated that Electrolux, which lost money in the past three quarters, isn’t interested in Midea’s offers. However, it may be a negotiation technique considering how much the Germans received last time. Midea paid 36% more and guaranteed management until 2023 to acquire Kuka.
However, European governments are even more wary of Chinese acquirers, and Chinese officials, worried about debt and capital flight, have tightened overseas investment controls. Global competition authorities will also care. However, cash-rich Chinese companies like Midea may cautiously test cross-border M&A markets this year to offset weak domestic demand. (Pete Sweeney)
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