(Yicai Global) Aug. 13 -- Dong Mingzhu, chairwoman of Gree Electric Appliances, will face an uphill battle to buy a 15 percent stake in the industry titan after it unveiled new rules to govern its mixed-ownership reform.
Whoever buys the shares must be a single legal entity, or be concerted actors with the same controlling shareholder if a consortium of separate entities, China's second-largest appliance maker said yesterday. The buyer should have a good commercial reputation and have the cash on hand to pay once the deal, expected to fetch about CNY45.67 (USD6.47) a share, is complete.
The Guangdong province-based firm announced in April that its parent Gree Group was publicly soliciting offers for a 15 percent stake as it sought to reduce state control over the company. The seller has spoken with at least 25 institutional investors, including Hopu Fund, Hillhouse Capital, Baidu and Temasek, but Dong is said to be leading a team of Gree executives who hope to acquire the stock.
The new rules clearly favor large institutions and will hinder Dong's efforts to land the stake, an insider told Yicai Global. The deal could cost almost CNY40 billion (USD5.7 billion) and Dong and her team may not be able to pay up front, slowing down receipt of the funds, he added.
State-owned Gree Group will hold just 3.22 percent of Gree Electric after selling the shares, which under the new rules the buyer must lock up for at least 36 months to ensure they focus on improving the quality of the listed unit and enhance economic and social development in Zhuhai.
Editor: James Boynton