Hisense mulls over Kelon purchase
By Hu Yuanyuan (China Daily)
Updated: 2005-08-03 05:54

Hisense, one of China's leading white goods manufacturers, intends to buy a stake in Kelon, a once-renowned refrigerator maker that is now in deep trouble, an insider at Hisense told China Daily.

A sales assistant on a Hisense stand at a recent high-tech fair in Beijing. Hisense, one of China's leading white goods manufacturers, intends to buy a stake in Kelon. [newsphoto]

"We plan to buy part of Kelon, but the price has not yet been decided," said Zhu Shuqin, manager of brand marketing at Hisense.

According to Shanghai Securities News, Hisense has offered 1.1 billion yuan (US$136 million) to acquire about a quarter of Kelon's shares that are owned by Greencool. This is a good price, experts say.

Greencool, Kelon's largest shareholder, has a 26.43 per cent stake in Kelon, with a total of 262 million shares.

According to Kelon's financial report for the first quarter of this year, each share is worth 2.89 yuan (36 US cents). This means Greencool has 757 million yuan (US$93.4 million) worth of Kelon shares, much lower than Hisense's bidding price.

A top manager at Hisense said there were various reasons for the high price.

"Hisense wants to make breakthroughs in refrigerator and air conditioning manufacturing, both are Kelon's strong points," he was quoted by Shanghai Securities News as saying. "Besides, Kelon is a household name and enjoys good quality assets."

Strong support from the local government where Kelon in based in Shunde, experts say, is also an important factor in attracting buyers to Kelon.

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