Toshiba and Midea Agree on the Transfer of Toshiba's Home Appliances Business and to Strengthen Strategic Partnership
• Toshiba and Midea Sign Definitive Agreement to Transfer 80.1% Stake in Toshiba’s Home Appliances Business and to Strengthen Strategic Partnership
•Midea Will Be Licensed to Use Toshiba Brands for Home Appliances for 40 Years
•Midea Is Committed to Maintain Trusted Brand Image, Best Practices, First Class Customer Service, and High Quality Standard
TOKYO, Japan and FOSHAN, China - March 30, 2016 - Toshiba Corporation (TOKYO: 6502, “Toshiba”) and Midea Group Co., Ltd. (SZSE: 000333, “Midea”) today jointly announced that they have signed a Definitive Agreement (“DA”) to transfer Toshiba’s Home Appliances Business to Midea and to strengthen their strategic partnership. By leveraging each other’s complementary capabilities and resources, the two well-respected enterprises will jointly explore growth opportunities.
As one of the initiatives to benefit from the partnership, Toshiba and Midea have entered into a DA under which Midea will acquire an 80.1% stake in Toshiba Lifestyle Products & Services Corporation (“TLSC”), the home appliances arm of Toshiba (the “Business” or “Toshiba Home Appliances”), while Toshiba will retain a 19.9% shareholding. The Business will continue to develop, manufacture and market white goods, such as refrigerators, washing machines, vacuum cleaners and other small domestic appliances under the Toshiba brand name and the current company name. All employees of TLSC group engaged in the Business will continue to work with TLSC group. Midea will be licensed to use the Toshiba brand worldwide in relation to the Business for 40 years. Additionally Midea will receive more than 5,000 intellectual property assets and a license to use other home appliance related intellectual properties retained by Toshiba.
“We are glad to witness the fruition of our strategic partnership with Midea, crystallized by this transaction,” said Masashi Muromachi, Representative Executive Officer, President and CEO of Toshiba. “The home appliances business has long been an important part of our company, culture and brand image. In the process of identifying a trusted partner, we carefully looked at track records, capabilities, resources and commitment to the Business. Midea and Toshiba have more than 20 years’ successful cooperation in various areas and have built a good mutual understanding. We are impressed by Midea’s focus on globalization, strong product development capabilities, extensive global distribution network and commitment to high quality. I am confident that Midea’s further investment in R&D, marketing and branding will bring about a brighter future for the home appliances business.”
This transaction will be beneficial to all stakeholders including consumers, business partners, employees and shareholders. The complementary strengths of Toshiba Home Appliances and Midea will create significant synergies in product offerings, market presence and operating efficiency. Midea intends to make further investment in the brand, technology, marketing and people, to fully realize the potential of the Business.
Mr. Fang Hongbo, Chairman and President of Midea, commented: “We are pleased to elevate the partnership between Toshiba and Midea to a new level, which I am sure will foster many more exciting cooperation opportunities ahead. Today is also an important landmark in Midea’s globalization endeavor. With a strong global home appliance and HVAC business, the addition of Toshiba Home Appliance, its iconic brand, talented team and leading technologies, will significantly strengthen our competitiveness in Japan, Southeast Asia and the global market. We appreciate the trust that Toshiba has placed in us by signing up to a long term brand licensing arrangement. Midea will continue our adherence to the highest standard of brand image, product quality, and customer service, which has been the bedrock of our achievements to date. We also recognize that the Business’s current management and employees are very valuable assets, and I am confident that our additional investment will offer many promising opportunities for this talented team. I look forward to working closely with Toshiba to further grow the Business and develop Midea into a global home appliance power house with a focus on innovation.”
Transaction Details and Approvals
The transaction price for the 80.1% stake is approximately JPY53.7 billion (US$473 million) (subject to certain adjustments) at closing.
The closing of the transaction is subject to customary regulatory filings in China and customary anti-trust clearances in relevant jurisdictions. No shareholder approvals are required for either Toshiba or Midea.
Midea is a global leading consumer appliances and heating, ventilation and air-conditioning (HVAC) systems business, with diversified product offering, encompassing air-conditioners, refrigerators, laundry appliances, kitchen appliances and various small home appliances. Midea is committed to build a better life and become the world’s Midea by adhering to the principle of “Creating Value for Customers”. Midea is focused on continuous technological innovation to improve product and service quality, to make life more comfortable and pleasant.
Founded in 1968 in Guangdong, China, Midea has now established a global platform of more than 200 subsidiaries and 9 strategic business units. Midea had total revenues of over US$21 billion in the fiscal year ended December 31, 2015 and approximately 100,000 employees worldwide.
To learn more about Midea, please visit http://www.midea.com/global
Toshiba Corporation, a Fortune Global 500 company, channels world-class capabilities in advanced electronic and electrical product and systems into three focus business fields: Energy that sustains everyday life, that is cleaner and safer; Infrastructure that sustains quality of life; and Storage that sustains the advanced information society. Guided by the principles of The Basic Commitment of the Toshiba Group, “Committed to People, Committed to the Future”, Toshiba promotes global operations and is contributing to the realization of a world where generations to come can live better lives.
Founded in Tokyo in 1875, today’s Toshiba is at the heart of a global network of over 580 consolidated companies employing 199,000 people worldwide, with annual sales surpassing 6.6 trillion yen (US$55 billion). (As of March 31, 2015.)
To find out more about Toshiba, visit www.toshiba.co.jp/index.htm