Japan's Toshiba Corporation and China's Midea Group Co jointly announced that they have signed a Definitive Agreement (“DA”) to transfer Toshiba’s Home Appliances Business to Midea at a 473 million dollar transaction.
In a statement Thursday, Midea said the agreement is meant to strengthen their strategic partnership. By leveraging each other’s complementary capabilities and resources, the two well-respected enterprises will jointly explore growth opportunities.
As one of the initiatives to benefit from the partnership, Toshiba and Midea have entered into a DA under which Midea will acquire an 80.1% stake in Toshiba Lifestyle Products & Services Corporation (“TLSC”), the home appliances arm of Toshiba (the “Business” or “Toshiba Home Appliances”), while Toshiba will retain a 19.9% shareholding.
The Business 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 and the current company name. All employees of TLSC group engaged in the Business will continue to work with TLSC group.
Midea will be licensed to use the Toshiba brand worldwide in relation to the Business for 40 years. Additionally Midea will receive more than 5,000 intellectual property assets and a license to use other home appliance related intellectual properties retained by Toshiba.
“We are glad to witness the fruition of our strategic partnership with Midea, crystallized by this transaction,” said Masashi Muromachi, Representative Executive Officer, President and CEO of Toshiba. “The home appliances business has long been an important part of our company, culture and brand image. In the process of identifying a trusted partner, we carefully looked at track records, capabilities, resources and commitment to the Business.
Midea and Toshiba have more than 20 years’ successful cooperation in various areas and have built a good mutual understanding. We are impressed by Midea’s focus on globalization, strong product development capabilities, extensive global distribution network and commitment to high quality. I am confident that Midea’s further investment in R&D, marketing and branding will bring about a brighter future for the home appliances business.”
This transaction will be beneficial to all stakeholders including consumers, business partners, employees and shareholders. The complementary strengths of Toshiba Home Appliances and Midea will create significant synergies in product offerings, market presence and operating efficiency.
Midea intends to make further investment in the brand, technology, marketing and people, to fully realize the potential of the Business.
Mr. Fang Hongbo, Chairman and President of Midea, commented: “We are pleased to elevate the partnership between Toshiba and Midea to a new level, which I am sure will foster many more exciting cooperation opportunities ahead. Today is also an important landmark in Midea’s globalization endeavor. With a strong global home appliance and HVAC business, the addition of Toshiba Home Appliance, its iconic brand, talented team and leading technologies, will significantly strengthen our competitiveness in Japan, Southeast Asia and the global market."
He added "We appreciate the trust that Toshiba has placed in us by signing up to a long term brand licensing arrangement. Midea will continue our adherence to the highest standard of brand image, product quality, and customer service, which has been the bedrock of our achievements to date. We also recognize that the Business’s current management and employees are very valuable assets, and I am confident that our additional investment will offer many promising opportunities for this talented team. I look forward to working closely with Toshiba to further grow the Business and develop Midea into a global home appliance power house with a focus on innovation.”
The transaction price for the 80.1% stake is approximately JPY53.7 billion (US$473 million) (subject to certain adjustments) at closing.
The closing of the transaction is subject to customary regulatory filings in China and customary anti-trust clearances in relevant jurisdictions. No shareholder approvals are required for either Toshiba or Midea.