Gome Electrical in takeover attempt

Main board-listed Gome Electrical Appliance, China's largest home electrical appliance retailer, is attempting to acquire total control of the retail chain.

'We're actively progressing with the [acquisition] plan. We have applied to the government authority and are waiting for approval,' said chairman Wong Kwong-yu, who currently owns a 64.9 per cent stake in Gome Electrical Appliance.

The company has submitted an application to the Ministry of Commerce to acquire the 35 per cent stake in Beijing Gome Appliance it does already not own, taking advantage of the recent lifting of government restrictions on foreign investment.

Last July, Mr Wong secured a back-door listing for his home appliance retail chain operator, Beijing Gome Appliance, by injecting a 65 per cent stake of it into former property investment company Great Eagle Group for 8.8 billion yuan.

Great Eagle was subsequently renamed Gome Electrical Appliance. The new company said it planned to take full control of the retail chain operator when regulations allowed.

With the lifting of barriers on foreign ownership of retail chains under China's commitment to the World Trade Organisation, it is believed Gome will pay $6.05 billion for the 35 per cent stake in the retail chain operator, of which about $1 billion will be in cash, with the remainder to be settled in shares in the listed company.

However, Mr Wong said the terms of the acquisition were yet to be finalised.