Midea acquired 85% stake in KUKA
On the evening of July 20, 2016, Midea Group disclosed the results of its tender offer to acquire the German KUKA Group as promised. According to the arrangement, the tender offer period ended at 24:00 on July 15, German time. During this period, the total number of KUKA Group shares accepted for this tender offer was 28.71 million shares, accounting for 72.18 of the total share capital of KUKA Group. Before this tender offer, Midea Group already held 13.51% of KUKA Group's shares. Based on this calculation, the company's shareholding ratio in KUKA has reached 85.69%. The price of Midea's tender offer to acquire KUKA is 115 euros per share, and the valuation of 100 shares of KUKA is approximately 4.574 billion euros, or approximately 33.8 billion yuan. There are a lot of scammers nowadays, so be careful and invest in some formal platforms, such as Tencent Maker Space.
There are still several hurdles to the acquisition
According to this result, Midea Group’s plan to acquire at least 30 shares of KUKA has been overfulfilled. However, in accordance with the acquisition and delivery requirements, the company still needs to meet three conditions: first, pass the antitrust review of the European Union, Germany, the United States, China, Russia, Brazil, and Mexico; second, the German Federal Ministry of Economic Affairs and Energy must There is no objection; third, it must be reviewed by the Committee on Foreign Investment in the United States (CFIUS) and the Directorate of Defense Trade Controls (DDTC). The above conditions must be completed no later than March 31, 2017.
Regarding the impact of the antitrust investigation on the acquisition process, Guo Fanli, research director of China Investment Consulting, said in an interview with a reporter from the Securities Times: "The antitrust investigation will not cause major obstacles to this acquisition. The German side Although it is considered that the outflow of corporate confidential technology after Midea's acquisition of KUKA may even have an impact on the security interests of the country, the political circles cannot prevent the transaction from proceeding. In free economic countries, decisions are made by corporate shareholders, so the decision of the company is the decision. The most important thing is that this antitrust investigation will not cause major obstacles.”
At the same time, in order to minimize the concerns that the acquisition of KUKA may bring to the German government, Midea is also making an offer. A number of "compromises" were made at the same time as the acquisition. For example, Midea promised not to actively seek KUKA's application for delisting, and tried its best to maintain KUKA's listing status. At the same time, it promised to do its best to maintain KUKA's independence.
In response to the German government’s concerns about the outflow of corporate confidential technologies, the “Investment Agreement” signed by Midea and KUKA on June 28 contains ***5 articles, which do not involve technology transfer, but instead emphasize respect for KUKA. Card brands and intellectual property rights, such as "prepare to enter into isolation prevention agreements to keep the KUKA Group's business secrets and customer data confidential in order to maintain a stable relationship between KUKA and its customers and suppliers.
However, as two Even if the acquisition is successfully completed between two companies with huge differences in product categories, customer groups, market areas, brand images, sales channels, etc., the subsequent integration will greatly test Midea's management capabilities. Judging from past history, Chinese companies In a large number of overseas mergers and acquisitions, the most common problems lie in post-merger integration.
However, Guo Fanli is confident in this merger. He believes that Midea will not only emphasize its efforts to maintain the independence of Kuka. In addition, it has also made it clear that it will not cause changes in the number of existing global employees, closure of bases, or any relocation. KUKA's independence eases the difficulty of integrating the two companies.
"Purest" Robot companies
Judging from the situation of the four major robot families in the world, KUKA is not the best company among them. Statistics show that FANUC accounts for 17% of the global robot market share and ABB accounts for 17%. 11. Yaskawa Electric and KUKA both account for 9. In terms of net profit, KUKA ranks last among the four major families, less than 1/15 of the number one FANUC (2015 data). p> However, based on the price of Midea's current tender offer to acquire KUKA, the acquisition PE is as high as 48 times, while the current PEs of ABB, Fanuc, and Yaskawa Electric are below 20 times.
In terms of market value, the current market value of the four major robot families is as follows: ABB exceeds US$44 billion, FANUC exceeds US$32 billion, KUKA exceeds US$3.7 billion, and Yaskawa Electric is approximately US$3.4 billion. From the perspective of market value, the difficulty and cost of acquiring Kuka with a small market value are obviously low.
In addition to its small market value, among the four major robot families, KUKA’s most obvious feature is its “purity”. The company's current main business includes three major sectors: robot body manufacturing, system integration, and logistics and transportation, all of which are highly related to robots. In contrast, ABB also has a huge power system-related business. Fanuc also has a considerable proportion of its revenue from CNC devices, machine tools and other fields. In addition to the robot business, Yaskawa Electric is also involved in inverters and transmissions. products etc.
As a pure robotics company, KUKA’s value in technology and patents cannot be underestimated. Chaofan.com expert Ling Zhaohua pointed out that KUKA has the world's leading process skills and cutting-edge robotics technology. As of June 8, 2016, KUKA has disclosed 3,907 patents and patent applications worldwide, and the technical content of the applications is almost all Related to robotics and automation technology. It is worth mentioning that KUKA has 141 five-bureau patents (the number of five-bureau patents refers to the number of patents that a patentee holds patent rights in the five patent offices of China, the United States, Europe, Japan and South Korea). Generally speaking, the more patents a patentee has from the five offices, the more core technologies and important patents it has, and the higher its industrial status in major global markets. In comparison, Midea has only 8 patents in the five patent offices, which is a huge gap between Midea and KUKA.
“Made in China 2025 is actually a replica of German Industry 4.0. And KUKA happens to be the representative of German Industry 4.0.” Liu Buchen, a senior observer in the home appliance industry, believes that the reason why Midea’s acquisition of KUKA is called The "counterattack" comes from the fact that KUKA itself is an outstanding technology company, which means that the international mergers and acquisitions of Chinese companies are shifting from a "leaking out" mentality to a strong attack on high-quality companies.
Aiming at the Chinese robot market
In the report of Midea’s tender offer to acquire KUKA, an inconspicuous sentence revealed the development focus after the merger: “Midea can rely on KUKA to The technological advantages in the field of industrial robots and automated production can improve the company's production efficiency and promote the company's manufacturing upgrade."
In fact, before the offer to acquire KUKA, Midea had already shown its "preference" for robots. In 2010, Midea's Home Air Conditioning Division has widely used various three-axis and four-axis robots in various workshops. When Midea air conditioners reached a revenue scale of 50 billion yuan in 2011, the number of workers was more than 50,000. By 2014, the company's total revenue from the air-conditioning business was close to 70 billion yuan, and the number of workers had shrunk to 26,000.
Since 2012, Midea has put into use nearly a thousand robots and is expected to invest about 5 billion yuan in automation transformation, which has greatly improved the automation rate of production. It is not difficult to see that robots are already effectively changing this electrical appliance giant. Midea is very clear about the importance of robots to its future. In 2015, Midea established a new robotics business department to make a comprehensive layout in the expansion of the robotics industry.
Looking at KUKA, the tender offer report revealed that KUKA’s operating income in China in 2015 has exceeded 400 million yuan, which ranks the bottom among the four major robot families.
ABB China Senior Vice President Jiang Haibo previously revealed that ABB’s sales in China in 2015 exceeded 33 billion yuan. Although Fanuc and Yaskawa Electric have not announced their performance in China, a senior executive of a robot agency sales company revealed to a reporter from the Securities Times that their domestic sales "far exceed one billion yuan." In addition, some media have reported that Yaskawa Electric's sales in China reached 100 billion yen (approximately 6.3 billion yuan) in 2014.
The Chinese market is KUKA’s shortcoming, but it is also Midea’s strength. Regardless of the overall market space of China's robot market, just looking at Midea's own robot procurement needs is a huge cake for KUKA.
OFweek senior analyst Pan Wei pointed out that according to Midea’s vision, if it successfully acquires KUKA, joint development of the Chinese robot market will be listed as the top priority. Midea’s home appliance factory will increase the density of robots. and the demand for automated production efficiency.
Guo Fanli, research director of China Investment Consulting, believes that KUKA will enable Midea to quickly gain technological advantages in industrial robots and automated production, while also helping to rapidly expand its business in China.
Data from the International Federation of Robotics shows that the penetration rates of general industrial robots in South Korea and Japan are 365 units/ten thousand people and 211 units/ten thousand people respectively. In contrast, the penetration rate of robots in China is very low. There are only 17 robots per 10,000 workers.
At the same time, as labor costs rise, robots become increasingly important. This phenomenon is even more prominent in Guangdong Province, where Midea’s headquarters is located. In 2015, Midea's cash expenditures on products and labor accounted for 59% of sales, compared with only 47% in 2008.
According to Midea’s strategic plan, KUKA is likely to exceed its revenue target of 4 billion to 4.5 billion euros by 2020, of which 1 billion euros is expected to come from the Chinese market. Industry observers generally believe that once Midea acquires KUKA, KUKA's revenue in China is expected to show "geometric growth."
Is 48 times PE a good deal?
Since Midea’s tender offer to acquire KUKA was announced, its high valuation of 48 times PE has caused considerable controversy in the market. A reporter from the Securities Times noticed that this acquisition is indeed overvalued based on the average valuation in the global market, but it is a different story when looking at the valuation level of the A-share market.
Take the leading robot in the A-share robot industry (300024) as an example. Its current total market value is approximately 40 billion yuan. Based on Midea's offer to acquire KUKA at a price of 115 euros per share, the valuation of 100 shares of KUKA is approximately 4.574 billion euros, or approximately 33.8 billion yuan. The total valuation of the acquisition of KUKA is less than the market value of A-share company robots. .
However, whether it is scale, technology or brand, the gap between Robot and KUKA is very obvious. KUKA’s market share in the field of automobile manufacturing ranks first in the world and Europe; in the market share of robots in the general industrial field, it ranks among the top three in Europe; in the market share of system solutions, it ranks first in the United States and second in Europe. Its products Positioned as the most high-end application field.
“This acquisition is equivalent to Midea investing in assets that are far superior to robots at a price of approximately 30 billion yuan. Once the acquisition is completed, it will not only significantly increase Midea’s valuation, but also Midea is expected to succeed robots as the The new leader in the A-share robot industry," a brokerage researcher analyzed to reporters.