Midea Intends to Increase Its Stake in KUKA AG through Voluntary Takeover Offer

SHUNDE, China, May 18, 2016 /PRNewswire/ --

-- Offer at EUR 115 in cash per KUKA share
-- Premium of 59.6 percent over KUKA's unaffected closing price on February
3, 2016, the day before publication of the increase of Midea's stake to
10.2 percent
-- Mutual strategic benefits through complimentary businesses and joint
development of robotics for applications in general industry and
logistics as well as service robotics
-- Midea fully committed to KUKA's independence and status as a listed
entity in Germany, and is committed to invest in KUKA's employees,
brand, intellectual property and facilities to further support the
company's development

Midea (Midea Group Co Ltd, SZSE 000333), one of the world's leading industrial groups in consumer appliances and Heating, Ventilation and Air-Conditioning (HVAC) systems, announced today its intention to launch a voluntary takeover offer through its affiliate MECCA International (BVI) Limited for all shares in KUKA (KUKA AG), a leading global supplier of intelligent automation solutions, at EUR 115 per share. The decision confirms Midea's previously stated intention to increase its shareholding in KUKA. Currently, Midea indirectly owns 13.5 percent of KUKA's shares. In line with the applicable regulatory framework, the increase of the shareholding to more than 30 percent requires an offer for all issued shares in KUKA AG.

Midea is committed to maintaining KUKA's independence as a publicly listed company in Germany and has no intention of entering into a domination agreement regardless of the result of the takeover offer.

The all-cash proposal provides KUKA's shareholders with compelling and immediate value, as it represents a 59.6 percent premium over KUKA's unaffected closing price of EUR 72.05 on February 3, 2016, the day before the publication of Midea's 10.2 percent stake. The completion of the takeover offer will be subject to certain conditions. These include, in particular, achieving a minimum acceptance threshold of 30 percent of the issued shares of KUKA, including the shares already owned by Midea, necessary antitrust and other regulatory clearances and approval of the transaction by the shareholders' general meeting of Midea.

Paul Fang, Chairman and CEO of Midea, comments on the announcement: "As a customer and investor, we have been impressed by KUKA's management and employees and have had constructive dialogue since building our initial stake in the company. KUKA is in excellent condition today and we are committed to investing in KUKA's employees, brand, intellectual property and facilities to further support the company's development. We would like to have a meaningful stake in KUKA above 30 percent and have no intention of concluding a domination agreement or delisting the company. We believe that a larger shareholding strikes the right balance between an independent KUKA while also putting both companies in a position to drive further growth through collaboration, especially in China. The investment fits perfectly into Midea's 'Smart²' strategy, which aims to upgrade our manufacturing competencies and develop smart home devices."

Mutual strategic benefit through complementary businesses and joint development of robotics for applications in general industry and logistics as well as service robotics

One of KUKA's stated key strategic focus areas is the broader robotics market in China, an area in which Midea also sees substantial growth opportunities driven by rising labour costs and an ageing Chinese population. KUKA stated that by 2020, it plans to grow sales to EUR 1 billion in China from EUR 425 million in its most recent financial year.

As a leading industrial company in consumer products, Midea has an extensive network of distributors, suppliers and other constituents and is therefore an ideal partner to significantly strengthen KUKA's positioning, address local customer needs and increase its exposure to general industries in China, which has the largest and most diverse general industries sector in the world. Based on its excellent manufacturing capabilities, Midea will seek opportunities to support KUKA to fully utilize its capabilities and network and realise efficiencies in its supply chain.

Having serviced households both inside and outside of China for decades, Midea sees substantial potential, specifically in smart home appliances. In 2015, Midea launched its "Smart²" strategy, not only to further upgrade Midea's manufacturing and logistics automation via additional investments in robotics, but also to look into developing smart home devices based on robotics technology. Midea's goal is to raise its overall sales over the coming years to over EUR 25 billion, of which smart devices and service robotics will form a significant portion.

Andy Gu, Vice President of Midea, says: "Midea sees KUKA as its partner of choice in further enhancing its automation product and service offerings, while Midea makes an ideal partner for KUKA to develop, manufacture and market KUKA's robotics proposition. We look forward to leveraging our experience and additional financial resources to accelerate KUKA's strategy in China and support their expansion into general industries."

Midea also aims to enhance its manufacturing efficiency through KUKA's technology throughout its industrial base and supply chain, while KUKA can capitalize on Midea's manufacturing expertise to further develop innovative solutions. Moreover, there is a strong strategic rationale in an increased collaboration between KUKA's "Swisslog" business and Midea's broad logistics operations to drive warehouse and logistics automation in the growing Chinese logistics market. Midea sees significant opportunities to combine each company's strengths -- KUKA's robotics expertise and Midea's established position in customers' homes -- and jointly strengthen the footprint in the future service robots market by seeking opportunities to develop customized product lines, such as home and service robotics products.

Midea values KUKA's independence and proposes corresponding commitments

Midea fully supports the operational independence of KUKA's business. Midea regards the continued leadership of the current management team as critical to KUKA's continued success and is fully supportive of KUKA's current strategy, employment base and brand development.

"We intend to seek representation on the Supervisory Board in a manner which appropriately reflects our shareholding and look forward to working constructively with the other KUKA Board members and shareholders to support the company's future development. We are prepared to agree to specific commitments in this regard. We expect these to include continued support for KUKA's employment levels, brands and intellectual property. Moreover, we will look to support KUKA's additional investments in Research and Development and software to maintain its competitive advantage," said Midea Chairman and CEO, Paul Fang.

Additional information

The transaction will be implemented through a voluntary takeover offer for all outstanding shares of KUKA. Midea has the financial capacity needed to implement the transaction. The financing of the transaction will be achieved by a credit facility.

Morgan Stanley is acting as exclusive financial advisor and Freshfields Bruckhaus Deringer is acting as legal advisor to Midea on the transaction.

This announcement does not constitute an offer or an invitation to purchase any securities. The intended takeover offer will be made solely by means of the yet to be published Offer Document, which will contain the full terms and conditions of the intended takeover offer including details of how it may be accepted.

This document may contain certain forward-looking statements. Such statements are, in particular, indicated by terms such as "expects", "believes", "is of the opinion", "attempts", "estimates", "intends", "assumes" and "endeavors" and similar phrases. Such statements express current intentions, views, expectations, estimates and forecasts with regard to possible future events. They are, inter alia, based on certain assumptions, assessments and forecasts, are subject to risks and uncertainties and therefore they may turn out to be incorrect.

Notice to US holders of KUKA AG Shares:

The intended takeover offer is being made for the securities of a German company and is subject to German disclosure requirements, which are different from those of the United States. The financial information included in this announcement has been largely prepared in accordance with International Financial Reporting Standards and the generally accepted accounting principles of the PRC and thus may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States. The intended takeover offer will be made in the United States pursuant to the applicable US tender offer rules, including Regulation 14E and relevant provisions on exemptions from the prohibition on purchases outside the intended takeover offer and otherwise in accordance with the requirements of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz). Accordingly, the intended takeover offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and law.

To the extent permissible under applicable law or regulation, MECCA International (BVI) Limited (the Bidder) and its affiliates or brokers (acting as agents for the Bidder or its affiliates, as applicable) may from time to time before, during or after the period in which the intended takeover offer remains open for acceptance, and other than pursuant to the intended takeover offer, directly or indirectly purchase, or arrange to purchase, shares of KUKA AG, that may be the subject of the intended takeover offer, or any securities that are convertible into, exchangeable for or exercisable for shares of KUKA AG. Any such purchases, or arrangements to purchase, will comply with all applicable German rules and regulations and Rule 14e-5 under the U.S. Securities Exchange Act to the extent applicable. Information about such purchases will be disclosed in Germany to the extent required by applicable law. To the extent information about such purchases or arrangements to purchase is made public in Germany, such information also will be deemed to be publicly disclosed in the United States. In addition, the financial advisors to the Bidder may also engage in ordinary course trading activities in securities of KUKA AG, which may include purchases or arrangements to purchase such securities.

About Midea

Midea is a leading global player in consumer appliances and Heating, Ventilation and Air-Conditioning (HVAC) systems, with diversified product offering, encompassing air-conditioners, refrigerators, laundry appliances, kitchen appliances and various small home appliances. Midea is committed to build a better life by adhering to the principle of "Creating Value for Customers". Midea is focused on continuous technological innovation, including robotics, to improve product and service quality, to make life more comfortable and pleasant.

Founded in 1968 in Guangdong, China, Midea has now established a global platform of more than 200 subsidiaries and nine strategic business units. Midea had total revenues of over EUR 18.7 billion in the fiscal year ending December 31, 2015 and approximately 100,000 employees worldwide. Midea runs 21 manufacturing sites globally and operates 260 logistics centres. Midea is listed on the Shenzhen Stock Exchange (000333).

To learn more about Midea, please visit at http://www.midea.com/global/ [http://www.midea.com/global/]

To learn more about the takeover offer, please visit http://www.partnershipinrobotics.com/ [http://www.partnershipinrobotics.com/]

Midea KUKA Partnership Factsheet: http://photos.prnasia.com/prnk/20160518/8521603191-a [http://photos.prnasia.com/prnk/20160518/8521603191-a]

Midea Group

CONTACT: Press contact for Germany: Alexa von Wietzlow,avonwietzlow@brunswickgroup.com, Tel. 0049 172 688 73 85; Alberta vonBrandenstein, avonbrandenstein@brunswickgroup.com, Tel. 0049 172 661 45 37;Press contact for China: Elaine Li, eli@brunswickgroup.com, Tel. 008529387-1132; Niels Schlesier, nschlesier@brunswickgroup.com, Tel. 008529628-2395

Web site: http://www.midea.com/global//

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