BMW Werk Leipzig, Creative Commons
Kuka robots on the BMW plant floor

Midea Grabs Largest Ownership Share of Kuka

July 5, 2016
The Chinese appliance giant purchased a quarter of the German robotics company from investor Voith, with another block of stock from billionaire businessman Friedhelm Loh.

China’s Midea Group Co. will become  Kuka AG’s largest shareholder after buying a 25% stake in the German robot maker from investor Voith GmbH as part of a deal that’s been closely scrutinized by lawmakers.

Voith will get about 1.2 billion euros ($1.34 billion) by selling its stake, the closely held company said in a statement on Sunday. Kuka’s third-biggest shareholder, Friedhelm Loh, has also decided to sell his shares to Midea, newspaper Handelsblatt reported on Monday, citing Loh. The combined purchases would take the Chinese company’s shareholding to just under 50%, well above the 30% it was seeking as part of the tender offer.

Loh and spokespeople for Kuka weren’t immediately available to comment.

The prospect of Kuka being taken over by a Chinese buyer has triggered concerns from leading politicians in Chancellor Angela Merkel’s government. Economy minister Sigmar Gabriel is leading a charge to find an alternative bid from a European suitor, a search that has so far failed to produce an offer. To help allay fears surrounding its approach, Midea has said it won’t pursue a domination agreement or de-listing of the shares.

The offer from Midea, China’s biggest appliance manufacturer, is open for four weeks from when it was published June 16. It was backed by Kuka CEO Till Reuter after the Chinese company offered assurances that jobs and plants will be protected until the end of 2023.

Midea, which said on May 18 it had a 13.5% stake in Kuka, is offering 115 euros ($128.24) a share. It has pledged to help the company beat a 2020 sales target by expanding its product offerings to take advantage of the Chinese market, as well as expanding into household robots.

Kuka shares gained 0.1% to 106.80 euros ($119.09) at 1:57 p.m. in Frankfurt trading. The stock is up about 27% since the deal with Midea was announced May 18. Midea shares rose 1.5% to 24.45 yuan ($3.66) in Shenzhen trading Monday.

Midea wants to transform its manufacturing line with robot technology and is aiming to cut its workforce by a fifth to 80,000 by 2018, Midea chairman Paul Fang said in an interview in May. The company already has 100 Kuka robots in its factories. With $10.7 billion in free cash, Midea could do more acquisitions, although it intends to focus on expanding its brand in Europe and America, Fang said.

Voith, among the biggest family owned businesses in Europe, acquired its Kuka stake in late 2014 for less than half the amount it expects to receive. The German company said at the time that it wanted to take advantage of the trend toward increased industrial automation.

By Daniela Wei and Sheenagh Matthews, with assistance from Nicholas Comfort.

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Licensed content from Bloomberg, copyright 2016.

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