Chinese company Midea made an unsolicited bid Wednesday to gain a controlling stake in Kuka, a German maker of industrial robots.
Midea, a producer of air conditioning and household appliances, offered €115 per share, a 36-percent premium on Tuesday’s closing price. The deal would value Kuka at €4.57 billion, or $5.1 billion.
News of the bid drove Kuka’s share price up more than 30 percent Wednesday morning. It was still trading up more than 20 percent to €104.65 at 5 p.m. local time in Frankfurt.
“We want to help Kuka grow in China,” Andy Gu, Midea’s vice president, told Handelsblatt in an interview. “That is our strategic goal. Kuka has a long history and enjoys high regard in the industry,” he added.
Mr. Gu stressed that the Chinese firm has the cash to close the deal. “We have cash reserves of more than $10 billion,” he said. “The deal with Kuka would not cause us any difficulties.”
Midea made the official offer for Kuka’s shares through its subsidiary Mecca International, saying it hopes to raise its own stake in the German firm to more than 30 percent.
The IFR estimates that in 2018, a third of all new robots will be installed in China.
The Chinese firm already holds a 13.5-percent stake in Kuka. In February 2016, Midea first announced it had bought 10.2 percent of Kuka’s shares, already driving up the share price and igniting speculation about takeover intentions. It has since raised its stake in the German robotics company to 13.5 percent.
The current offer was made for all issued shares and is contingent on Midea gaining control of at least 30 percent of shares as well as regulatory approval for the deal.
Kuka, which is based in the Bavarian town of Augsburg, in a statement said that management and supervisors will assess the detailed takeover offer once it has been made public. Midea is currently awaiting approval from German financial supervision authority BaFin before publishing the full bid.
Kuka’s chief executive, Till Reuter, told the news agency Reuters that the company welcomed the interest from China. “We do not at all see this as hostile,” Mr. Reuter said of the takeover bid.
Kuka makes robotic solutions designed to automate factories, a field of particular interest to Chinese companies and authorities. According to the International Federation of Robotics, China only has 36 robots for every 10,000 workers. In Germany, the number is 292; in South Korea even 478.
In its strategy China 2025, the government in Beijing declared automation a key industry in order to catch up with advanced industrialized countries. Robotic technology plays an important role in that plan. The IFR estimates that in 2018, a third of all new robots will be installed in China.
“China is currently going all out to expand robotics in the country,” said Patrick Schwarzkopf, head of the robotics division at German engineering association VDMA. “The government in Beijing has recognized how important the topic is for future innovation,” he told Handelsblatt.
Midea’s vice president, Mr. Gu, said the acquisition would help reduce costs for Kuka products in China. “Costs are a big factor for buyers in China,” he said.
Besides robots, Kuka also develops digitized production systems, part of the Germany’s so-called “Industry 4.0” initiative to digitize manufacturing processes.
Using data analysis and networked logistics, the company presented an entirely digitized production cycle at the Hannover Messe, the world’s largest industrial trade fair, in April. Autonomous driving platforms, supply systems and robot arms carried out all steps of the process, from registering the order to production and delivery, without any human contribution.
Kuka, which had 12,000 employees in 2014 and subsidiaries in 25 countries worldwide, is already present in the Chinese market. In its offer, Midea promised to further aid the Germans’ market access in the Far East, according to a statement published on the Kuka website.
Midea also underlined that it had no intention of pushing for full control of the company. Kuka could maintain its independence as a company listed in Germany. The Chinese also promised to keep the headquarters in Germany and not lay off staff, according to the statement.
Voith, a German mechanical engineering firm, which has a 25.1-percent stake in Kuka, making it the company’s largest shareholder, did not say whether or not it would take up the offer. The firm said it first expected the Chinese company to provide it with further information about its plans, according to the Reuters news agency.
Allison Williams is deputy editor in chief at Handelsblatt Global Edition in Berlin. Stephan Scheuer is Handelsblatt’s China correspondent. Handelsblatt Global Edition editor Franziska Roscher and Handelsblatt’s Martin Wocher also contributed to this story. To contact the author: email@example.com