Gree Electric Appliances Inc., has announced on Monday purchasing mainland's fast growing electric vehicle company Zhuhai Yinlong New Energy Co. Through this acquisition, the largest Chinese air-conditioner manufacturer diversifies its business outside of home appliances.
Also based in Zhuhai, Gree will finance the acquisition of Yinlog through a share sale. However, the company hasn't disclosed a value for the purchase. But pledges to disclose more information on April 4, reports Bloomberg citing a regulatory filing with its listing authority Shenzhen Stock Exchange on Sunday.
Yinlong has been valued for ¥5 billion (HK$5.9 billion) during purchase of its 1% share for ¥50 million by investment company Fangde New Energy Investment during last month. Purchase of Yinlong by Gree has been analyzed as entry of another heavy-hitter into the expanding electric car business, according to a report published in the South China Morning Post.
Gree intends to dominate the global air-conditioning market while pursuing technology oriented diversified development, reads its annual report for 2014. During that year, around 85% revenue has been recorded from manufacturing air conditioners and accessories while 10% from other household appliances. Gree sells two out of its every five air conditioners in Chinese market, reports Canmua citing data from Euromonitor International as the source.
Yinlong has been reported to initiate manufacturing batteries for electric vehicles in 2009. Now it has production lines for seven electric passenger cars and 18 electric buses. Meanwhile, Gree competes with Midea Group Co. and Haier Group Corp. in the world's most populous market with factories in Brazil and Pakistan. Around 11% of Gree's total revenue is generated from outside China. Gree has been witnessing sluggish demand since its revenue has dropped 23% during third quarter of last year compared to same period of the previous year. Appearance of Gree in the electric car market hasn't been much delayed. The electric car market is still growing rapidly and many more manufacturers are expected to penetrate the market aiming to develop stronger supply chain, cites Liang Yonghuo, an analyst from China Merchant Securities (HK). China has reportedly exceeded the United States in electric car sales during last year. Around quarter of a million solely battery driven electric cars have been sold in the mainland China during last year, according to data revealed by Chinese central government. The figure appears just double compared to US sales of around 110,000, recorded by America's Electric Drive Transportation Association. Trading of Gree shares has been witnessing a pause since February 22 following the acquisition. However, the stock has been witnessed unchanged at ¥19.22 on February 19.
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