Photo/Guo Rongcun

Oct. 24 (NBD) -- Chinese home appliance giant Midea Group (000333. SZ) on Tuesday evening announced the plan to take in laundry equipment manufacturer Wuxi Little Swan Company Limited ("Little Swan") for 14.383 billion yuan (2.1 billion U.S. dollars).

To complete the merger, Midea Group will issue shares to all shareholders of Little Swan for exchange of A shares and B shares in the latter, with the exception of TITONI Investments Development Ltd, which is an overseas subsidiary of Midea Group.

Zhang Yanbin, vice chairman of the presidium of the China National Household Electronic Appliances Service & Maintenance Association, said to NBD that the merger with Little Swan is aimed to boost revenue and market value of Midea Group, facilitate the decision-making process of both sides, and reduce related party transactions.

Once the deal is closed, Little Swan will get delisted from the securities market and have its corporate capacity canceled. Midea Group will take over assets, debts, businesses, personnel, contracts and any other right and obligation of the washing machine manufacturer.

According to the announcement, the conversion price is pinned at 50.91 yuan per A share and 42.07 yuan per B share in Little Swan, and 42.04 yuan per share in Midea Group. Based on market practices and consideration of shareholders' interests, every Little Swan A share and B share will be swapped for 1.2110 and 1.0007 Midea Group shares, respectively.

Midea Group warned in the announcement that the deal is still subject to approvals from shareholders of both Midea Group and Little Swan as well as the China Securities Regulatory Commission.

The electrical appliance giant deemed the merger beneficial for global business integration of both parties, in that Midea Group will leverage Little Swan's status in the washing machine domain to create synergy effects in brand influence, bargaining power, user demand exploration, global strategic client network as well as research and development, and in return, Little Swan will benefit from the strategic layout and channel advantage of Midea Group to beef up its international presence.

Statistics from consumption market research firm China Market Monitor showed in 2017, Haier crowned No.1 in China's washing machine sector with a 29.9 percent market share, followed by Little Swan and Siemens grabbing 18.5 percent and 13.4 percent of the market share, respectively. Midea Group ranked fifth with a market share of 5.8 percent. After the merger, Midea Group and Little Swan, with a combined market share of 24.3 percent in the laundry machine domain, will narrow the gap against Haier.

Email: gaohan@nbd.com.cn