Shanghai-listed Qingdao Haier has agreed to buy air-conditioner and refrigerator businesses from its parent Haier Group for 706 million yuan in an attempt to boost profits. In a stock exchange statement published yesterday, Qingdao Haier said its directors and supervisors approved a plan to acquire Haier Group's majority stakes in four companies that make refrigerators and air-conditioners. In return, Qingdao Haier will issue 142 million shares to Haier Group at 4.97 yuan each, raising the parent's stake in the company to 43.54 per cent from 36.84 per cent. The issue price of 4.97 yuan is at a 2.5 per cent premium to the 4.85 yuan closing price of Qingdao Haier's shares on Friday when trading was suspended. The stock rose 3.7 per cent to 5.03 yuan yesterday when trading resumed. The deal will have to be approved by Qingdao Haier's shareholders at an extraordinary general meeting on October 18 and by the China Securities Regulatory Commission. Haier Group has promised to keep the new shares for at least three years, it added. 'This transaction will remove competition in the same industries between Haier Group and Qingdao Haier, raise Qingdao Haier's profitability and benefit its long-term development. The quality of the assets is high and their profitability strong,' said Qingdao Haier. The net return on assets of the companies to be acquired was 11.68 per cent last year, well above Qingdao Haier's net return on assets of 4.27 per cent, Qingdao Haier said. Earnings of the four companies will be consolidated into Qingdao Haier's accounts from July 1. The firm estimates the purchase will boost this year's turnover 15.38 per cent to 21.06 billion yuan, net profit 29.44 per cent to 394.98 million yuan and earnings per share 15.7 per cent to 30 fen. Haier Group also has a long-term plan to transfer its stake in Qingdao Haier to Haier Electronics Group, said Ricky Yip Wai-ming, chief financial officer of the Hong-Kong-listed unit. 'In the long term, Haier Electronics will indirectly own all the refrigerator and air-conditioner assets of Qingdao Haier.'