On October 24th news, Midea Group announced in the evening yesterday that Midea Group intends to issue A shares, and exchange shares to absorb the merger of Little Swan. The reason why the United States reorganized Little Swan is to value its profitability and assets and further integrate the white electricity business.
On the evening of October 23, Midea Group announced that the company intends to convert the shares by means of the issuance of A shares to absorb the merger of Little Swan, that is, Midea Group issued shares to Little Swan Group and all the conversion shareholders outside TITONI to exchange such shareholders. The Little Swan A shares and Little Swan B shares held. The Little Swan A and B shares held by Midea Group and TITONI are not involved in the conversion. These shares will be cancelled after the merger and absorption.
In this merger, Midea Group’s share price is tentatively set at 42.04 yuan / share; Little Swan A share conversion price is based on the average transaction price of 20 trading days before the pricing benchmark, and a 10% premium is given on this basis. The rate is determined to be 50.91 yuan/share; the conversion price of Little Swan B shares is based on the average transaction price of 20 trading days before the pricing benchmark date, and based on this, a 30% premium rate is determined, ie HK$48.41 per share. It is equivalent to RMB 42.07 per share.
The announcement shows that after the completion of the merger and acquisition, the company will terminate the listing and cancel the legal person qualification. Midea Group or its wholly-owned subsidiary will inherit and undertake all the assets, liabilities, business, personnel, contracts and other aspects of Little Swan. All rights and obligations. Midea Group will apply for listing on the Main Board of the Shenzhen Stock Exchange due to the issuance of additional A shares by the merger of the shares.
However, it is worth noting that this merger and acquisition still needs to be reviewed and approved by the board of directors and shareholders of the two companies of Midea Group and Little Swan. It must be approved by the China Securities Regulatory Commission before it can be formally implemented. As the relevant procedures have not been completed, Midea Group will continue to suspend trading on October 24.
The reorganization of Little Swan is the reorganization of the Little Swan once again after 8 years. As early as 2010, Midea had the first asset reorganization after entering the Little Swan, and Midea Electric will take over its Rongshida washing machine business. Inject the little swan. The industry believes that the reason why the United States reorganized Little Swan is to value its profitability and assets, and Little Swan’s powerful washing machine business has won the market for the United States.
According to Little Swan’s performance report, in the first half of 2018, Little Swan achieved operating income of 12.056 billion yuan, a year-on-year increase of 14.09%; net profit was 902 million, an increase of 23.31%. Net cash flow was 173 million, an increase of 221.64% year-on-year. Among them, the washing machine business achieved a revenue of 11.212 billion yuan, accounting for more than 90% of revenue.
The reorganization of Little Swan by Midea Group will promote the deep integration of the washing machine business of Midea Group, and the cooperation between Little Swan and Midea Group will form a better synergy. In terms of the washing machine business, the merger of Midea and Little Swan can have a larger market share for it.
According to Zhongyikang data, Haier, Little Swan and Siemens ranked the top three in the domestic washing machine market in 2017, with market shares of 29.9%, 18.5% and 13.4% respectively. Midea ranked fifth with 5.8%. After the merger of Midea and Little Swan, the market share will increase to 24.3%, which will greatly narrow the gap with Haier. But this is only to narrow the gap with Haier. If the United States wants to catch up with Haier, it still has some difficulty. After all, it still has a gap in its brand premium ability compared with Haier.