April 5, 2016, Tokyo, Japan – Toshiba Corporation and
Midea Group Co., Ltd
. Have signed a binding agreement Definitive Agreement on the transfer of Toshiba’s home appliances division to Midea, as well as to strengthen the strategic partnership. The effective utilization of the resources and power of two major corporations will help to jointly explore the growing market opportunities.
Toshiba and
Midea
have agreed to strengthen their strategic partnership and transfer the home appliance business to Toshiba
- Toshiba and Midea have signed a binding agreement to transfer 80.1% of Toshiba’s appliance division and strengthen their strategic partnership
- Midea will license Toshiba’s brands in the home appliance business for a period of 40 years
- Midea is committed to upholding the brand image, developing best practices, first-class customer service and high quality standards.
One of the initiatives of the partnership is that Midea will acquire 80.1% of Toshiba Lifestyle Products & Services Corporation TLSC, also known under the Toshiba Home Appliances brand while 19.9% will be retained by Toshiba. TLSC will continue to develop, produce and market large home appliances refrigerators, washing machines, vacuum cleaners and other household appliances under the Toshiba brand. All TLSC group employees will continue to work for the company. Midea will license Toshiba’s brand name for 40 years globally and will also receive more than 5,000 intellectual property rights and other intellectual property rights in the white goods business owned by Toshiba.
“We are pleased that the strategic partnership with Midea is bearing fruit in the form of this deal,
– Toshiba President Masashi Muromachi said. –
The home appliance business has been an important part of our company, culture and image for many years. In the process of searching for a trusted partner we carefully evaluated the achievements, the production capacities, the resources and the business reputation of. Midea and Toshiba have been successfully working together for more than 20 years in various business fields and have reached a high level of mutual understanding. We are inspired by Midea’s globalisation drive, its huge resources for product development, worldwide distribution network and dedication to quality. I am confident that Midea’s continued investment in R&D, marketing and branding will create bright opportunities for the appliance business.”.
The deal will be beneficial to all stakeholders, including consumers, business partners, employees and shareholders. Joint efforts by Toshiba Home Appliances and Midea will create tangible synergies that will strengthen the product portfolio, market presence and operational efficiency of the business. Midea is committed to investing in brand, technology, marketing and human resources to realize the full potential of the business.
Mr. Fang Hongbo, Chairman and President of Midea, commented on the event:
“We are pleased to take the partnership between Toshiba and Midea to the next level – I’m sure there are many exciting opportunities ahead. Today marks an important milestone in Midea’s drive towards globalization. With the legendary Toshiba Home Appliances brand, talented team and technology, we will significantly enhance our presence in Japan, Southeast Asia and the global marketplace. We appreciate the trust placed in us by Toshiba which led to the signing of the long-term license agreement. Midea will continue to promote the high standards of brand image, product quality and service that underpin all our achievements today. We believe the company’s management and staff are critical to the company’s success, and our further investment is a golden opportunity for this talented team. We will work with Toshiba, increase business volume and raise Midea’s profile as a global appliance manufacturer with a focus on innovation.
Transaction Details
The 80.1% stake will be priced at approximately JPY 53.7 billion $473 million and will be further refined at closing. Closing of the transaction will be reflected in regulatory filings in accordance with PRC law and will be subject to standard procedures for review under the antitrust laws of relevant jurisdictions. No additional approvals from Toshiba and Midea shareholders required.
About Midea
Midea is an international HVAC heating, ventilation and air conditioning consumer device manufacturer. The company’s diversified product portfolio includes air conditioners, refrigerators, kitchen and laundry room solutions. The company’s efforts are aimed at improving living conditions in accordance with the principle of “creating value for customers. Midea focuses on continuous technological innovation to improve products and services to make life more comfortable and enjoyable.
Midea was founded in 1968 in Guangdong Province, China. Today, it is a global company with more than 200 subsidiaries and 9 strategic business units. Midea’s revenues in fiscal 2015 ended December 31 were $21 billion, and Midea employs approximately 100,000 people worldwide. employees.
What drove Toshiba and Midea to agree on the transfer of the home appliance business? Will this have any significant impact on the market or the product offerings of both companies?
What prompted Toshiba and Midea to make this decision? Did they consider the potential impact on consumers and employees?