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.
The controlling shareholder will apply for a whitewash waiver and if the wavier is not secured, the deal will lapsed. A whitewash waiver means that Wong will not be required to take over the company.
The company said the transaction will be subject to other conditions such as approval by independent shareholders.
Gome Electrical said the acquisition represented an attractive opportunity for the company to consolidate its
position as the market leader in the electrical appliances and consumer electronic products retail market in the mainland China.