Midea said to plan takeover offer for Germany's Kuka

[SAN FRANCISCO] Midea Group Co, China's biggest maker of home appliances, is preparing a takeover offer for German industrial robot maker Kuka AG, according to two people familiar with the plans.

The offer to all shareholders could be made as soon as Wednesday, the people said, asking not to be named because the discussions are private. The Chinese company is seeking to increase its stake in Kuka to at least 30 per cent, but is unlikely to gain full control of the company, they said.

A 30 per cent stake would make Midea the biggest shareholder, leapfrogging Germany's Voith family.

Representatives of Midea and Kuka declined to comment. The Wall Street Journal reported on the planned bid earlier on Tuesday.

Kuka is already helping Midea to automate its factories, after the Chinese company doubled its stake to around 10 per cent earlier this year, chief executive officer Till Reuter said in March.

Midea may help improve Kuka's access to the Chinese market, according to the people with knowledge of the planned bid.

Kuka has expanded its Asian presence in recent years, opening a Shanghai factory in 2013 and increasing its China headcount by around 50 per cent in 2015. The company currently generates around 420 million euros (S$651 million) in sales in China, a figure which it hopes to expand above 1 billion euros by 2020, Mr Reuter said.

Midea had a 70 billion yuan (S$14.7 billion) war chest for acquisitions, vice president Yuan Liqun said in a March interview. It used US$490 million of that hoard to buy Toshiba Corp's home appliances business the same month.

Kuka stock has risen 1.6 per cent to 84.41 euros this year, valuing it at 3.4 billion euros.

Any effort to acquire complete control of Kuka would need the assent of shareholders Friedhelm Loh and the Voith Group, who between them own almost a third of the company.

BLOOMBERG