New | China’s Gome Electrical Appliances to buy retail unit for HK$11.27 billion

China’s Gome Electrical Appliances Holding plans to acquire a retail unit from controlling shareholder Wong Kwong-yu for HK$11.27 billion.

The mainland’s second-largest home-appliance retailer said the acquisition target is engaged in the retail sale of electrical appliances and consumer electronic products under the trademark “GOME Electrical Appliances” and related operations mainly in cities of the mainland in which the company already operates.

Such business is currently already operated by the company under management arrangements, according to the filing to the Hong Kong Stock Exchange on Sunday evening.

As of 31 March 2015, Artway Development, the retail unit of Wong, had 578 stores located across 181 cities in mainland China.

The transaction will be settled by HK$2.2 billion in cash, an issue of 6.2 billion new shares at a price of HK$1.39 each as well as an issue of 2.5 billion warrants at an exercise price of HK$2.15 each.

Following the issue of 6.2 billion new shares, Wong and his concerted parties will see their interest in Gome Electrical increase from the current 32.4 per cent to 50.2 per cent.