Haier Smart Home plans Hong Kong listing to take $7.7bn unit private

The Haier group was founded in 1984 by Chinese businessman Zhang Ruimin. (Reuters)
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Updated 12 December 2019

Haier Smart Home plans Hong Kong listing to take $7.7bn unit private

  • Haier Smart Home would offer minority shareholders in unit Haier Electronics Group newly issued Hong Kong stock for their shares
  • Haier Electronics makes and sells appliances such as washing machines

HONG KONG: Haier, the world’s biggest maker of household appliances, is planning a major restructuring that will see its main unit Haier Smart Home list in Hong Kong to take another group company valued at $7.7bn private, two people with direct knowledge of the matter said.
Under the deal, Haier Smart Home, formerly known as Qingdao Haier and already listed in Shanghai, would offer minority shareholders in unit Haier Electronics Group newly issued Hong Kong stock for their shares, they said.
Financial advisers have been hired to work on the deal, which would give Haier Smart Home access to cash at Haier Electronics, the sources said, declining to be identified as negotiations were private.
Haier Electronics, which makes and sells appliances such as washing machines, held about 20bn yuan ($2.8bn) in cash and short term investments as of end-June, according to Refinitiv.
One of the sources added the plan was also part of the Haier group’s efforts to streamline its overseas operations.
Haier Smart Home currently owns 45% of Haier Electronics and unlisted parent Haier Group Corp. holds 12%, while minority shareholders include Vanguard Group, Norges Bank Investment Management and BlackRock, according to Refinitiv data.
The plan is still preliminary and would be subject to regulatory approval, the sources said, adding that the aim was to complete the deal in the second half of next year.
A representative from Haier Smart Home’s investors relations office said the team was not aware of the plan. Haier Group and Haier Electronics did not respond to requests for comment.
The Haier group was founded in 1984 by Chinese businessman Zhang Ruimin who built up a small loss-making factory into a major consumer brand. Major acquisitions have included New Zealand appliances brand Fisher & Paykel in 2012 for NZ$927 million and the $5.6bn purchase of General Electrics’ appliances business in 2016.
Haier Smart Home, which has a market value of some $15.4bn, also listed in Germany last year — the first listing of a Chinese company under the D-share program aimed at increasing foreign investment in Chinese firms.
Hong Kong-listed companies have announced a record 24 take-private deals this year, often citing uncertain market conditions or undervalued shares as reasons for the deals.


German finance minister plans ‘debt brake’ suspension

Updated 27 February 2020

German finance minister plans ‘debt brake’ suspension

  • Scholz has long backed plans to lift a near-unbearable burden of repayments from 2,500 municipalities by shifting €40 billion ($43.5 billion) of their debts to Berlin

BERLIN: German Finance Minister Olaf Scholz plans to temporarily suspend a government “debt brake” to hand out tens of billions of euros to struggling municipalities, weekly Die Zeit reported on Wednesday.

With years of fat budget surpluses, Germany has long faced calls at home and abroad to loosen its purse strings, but the spread of the novel coronavirus and its likely impact on economic growth have given them new impetus.

“Scholz will present a plan in March,” Die Zeit wrote without citing its sources.

Scholz would need two-thirds majorities in both parliament’s directly elected lower house and the upper house representing the states to suspend the debt brake.

Anchored in the German constitution at the height of the financial crisis in 2009, the rule prevents government from running a deficit of more than 0.35 percent of the gross domestic product in normal times.

Finance Ministry spokeswoman Katja Novak declined to comment on “speculation,” telling AFP “the finance minister will present his proposals for dealing with old debt early this year.”

“At present various options are being discussed,” Novak added.

Scholz has long backed plans to lift a near-unbearable burden of repayments from 2,500 municipalities by shifting €40 billion ($43.5 billion) of their debts to Berlin.

He hopes it would lift a major hurdle to increasing infrastructure spending and eliminating financial and planning bottlenecks in municipalities responsible for projects like roads and schools.

Many of the towns affected are in deindustrializing “rust belt” zones, like Germany’s most populous state North Rhine-Westphalia.

After years of a no-new-debts policy known as the “black zero,” economists and EU partners are increasingly pressuring Berlin to upgrade aging infrastructure and stimulate its flagging economy with new spending.

A manufacturing slowdown in Europe’s top economy and the looming impact of the coronavirus have added urgency to such calls.

What is more, the European Central Bank’s monetary policy is already extremely loose, with negative interest rates and mass bond purchases under a “quantitative easing” scheme.

With little room to maneuver in Frankfurt, eurozone governments are on the hook to stimulate flagging economic growth, especially in case of a potential hefty shock stemming from an unforeseen event like the virus.