(Yicai) July 17 -- TCL Electronics Holdings’ shares jumped after the Chinese consumer electronics giant revealed plans to acquire its parent company’s air conditioning business, a move aimed at unlocking substantial operational and business synergies while enhancing financial resilience and profitability.

TCL Electronics [HKG: 1070] closed 5.2 percent higher at HKD14.18 (USD1.81) per share in Hong Kong, after climbing by as much as 6.7 percent earlier today. The benchmark Hang Seng Index fell 1.8 percent.

TCL Electronics will acquire a 51 percent stake in the air-con business from five affiliates of TCL Industries Holdings through a combination of HKD167 million (USD21.3 million) in cash and 363 million newly issued shares priced at HKD15 each, it announced late yesterday. That represents an 11.2 percent premium over the previous day's closing price of HKD13.48.

Following the transaction, TCL Industries' stake in TCL Electronics, held directly and indirectly, will drop to 51.5 percent from 54.5 percent.

TCL Industries has 12 air-con factories, including eight outside China, with an annual production capacity of 38 million units. Sales exceeded 22 million units last year, with overseas markets making up 76 percent.

TCL Industries' revenue from the air-con business rose 16 percent to about HKD33.8 billion (USD4.3 billion) last year, while net income soared around 40 percent to HKD1.9 billion, TCL Electronics noted. Profit was HKD300 million in the first quarter of this year.

TCL Electronics said it remains positive about the air-con business’ long-term growth potential, citing rising global demand driven by increasingly frequent extreme heat events worldwide and relatively low rates of adoption in Southeast Asia, Latin America, Africa, and other emerging markets. It also pointed to significant growth potential in China's lower-tier cities.

The acquisition will help transform TCL Electronics into a more diversified home appliances business, improving its resilience against market fluctuations while enabling closer coordination in management decisions and research and development between its air-con and television businesses, according to Guolian Minsheng Securities.

TVs are TCL Electronics' main business, with the company ranking second globally by shipments. Earlier this month, the firm said it expected net profit to have jumped 40 percent to 56 percent to between HKD1.5 billion and HKD1.7 billion in the six months ended June 30 from a year earlier, while revenue likely rose 10 percent to 20 percent to between HKD60.3 billion and HKD65.7 billion.

Editors: Tang Shihua, Martin Kadiev