Zhejiang Supor Cookware Co Ltd yesterday confirmed its takeover by French firm SEB Internationale SAS for 2.37 billion yuan (US$296 million).
According to the company's statement, Supor, China's largest cookware manufacturer, has agreed to sell a 61 percent stake to the France-based producer of small domestic appliances in a three-stage transaction.
A global leader in domestic appliances, and the world's largest manufacturer of small appliances, SEB's products are sold in more than 120 countries worldwide. The company is known for its Krups, Moulinex, Rowenta and Tefal brands.
The transaction will involve the placement of new shares and the purchase of shares from Supor's major investors.
Supor, founded in 1988, is one of China's largest manufacturers of electrical kitchen appliances. Its annual production capacity exceeds 3.5 million units, including 2 million rice cookers.
"The transaction benefits both sides. Supor will expand its overseas market by utilizing SEB's global sales network, while SEB will be able to take advantage of Supor's competitive edge in terms of cost-cutting and manufacturing in order to sharpen the profitability of its own products," said a top Supor official who asked not to be named.
He added that the deal would not halt the development of Supor's own brands or trading in Supor shares in China.
As part of the deal, SEB will transfer technologies, management expertise and more original equipment manufacturing and original design manufacturing projects to Supor. The two companies also agreed to share their sales and after-sales networks.
"The transaction will provide Supor with access to a vast overseas market," said Zhang Xiaogang, a senior analyst with Shanghai-based Orient Securities.
Supor saw its sales rise 66.39 percent to 950 million yuan (US$187 million) in the first half of this year, mainly a result of new products and growing exports. Its net profit grew 44.42 percent year-on-year in the first half of 2006.
"For SEB, Supor's sound sales networks will enable it to improve its sales in China and increase Chinese customers' awareness of its brands. But most importantly. SEB has been attracted by Supor's strengths in manufacturing and cost-cutting," said Zhang.
SEB's sales in Asia and Central Europe accounted for 26 percent of its total consolidated volume in 2005, according to ameinfo.com.
SEB has a wholly owned subsidiary manufacturing electrical cooking appliances aimed at the overseas market.
Market analysts said SEB's move would trigger a series of acquisitions and consolidations in the small domestic appliance industry.
Increasingly intense domestic competition has encouraged manufacturers to explore overseas markers, said Wang Jianhua, a researcher with Hangzhou-based Sinobeat Consulting Co Ltd.
(China Daily August 17, 2006)