Hisense Kelon Electrical Holdings jumped its 5 percent daily cap yesterday after saying it gained approval to issue shares worth 1.24 billion yuan (US$181 million) to buy white goods assets from its parent.
The move is part of its effort to consolidate manufacturing of air-conditioners, refrigerators and washing machines, the company said in a statement filed to the Shenzhen Stock Exchange.
Kelon planned to issue 362.8 million A-shares at 3.42 yuan each to its parent Qingdao Hisense Air-conditioning Co. In return, Hisense will inject its white goods assets including air-conditioner making facilities, refrigerators business and marketing arm into Kelon.
The price was based on the average stock price over the previous 20 trading days.
Hisense Air-Conditioning will become the controlling shareholder with a 45.21 percent stake in Kelon's enlarged share base, up from a 25.22 percent stake previously.
"Kelon's performance has been sluggish and the asset injection could lift its manufacturing efficiency to ensure development," Kelon said. "The white goods assets could help Hisense gain a bigger presence in the industry."
Kelon jumped its 5 percent limit to 6.31 yuan yesterday, compared to a 4.39 percent fall in the Shenzhen Composite Index. Its shares receive special treatment after posting two straight years of losses. The share price is limited to daily 5 percent swings, up or down.
(Shanghai Daily August 13, 2009)