Thinking big in Zhuhai? Foxconn said to be potential buyer of Gree Electric stake
Apr. 10 (NBD) -- Foxconn Technology Group ("Foxconn") is emerging as a potential buyer for a stake in Gree Electric Appliances Inc. of Zhuhai ("Gree Electric"), according to a report citing a source with a Zhuhai-based state-owned company.
The Zhuhai-based home appliances giant said in an announcement Monday that its controlling shareholder Gree Group is considering selling a 15 percent stake in the air conditioner and refrigerator giant. The company, however, did not identify the buyer of the stake.
It is speculated that the deal might see three possible scenarios: first, joint bidding from Gree Electric's Chairwoman Dong Mingzhu and the appliances maker's second largest shareholder Hebei Jinghai Guarantee Investment Co., Ltd.; second, offer made by external investor(s); and third, joint bidding from Dong, Hebei Jinghai, and external investor.
Foxconn is a strong contender as an external investor, as Zhuhai's construction land supply plan disclosed early this month has revealed signs of the electronics contract manufacturer's plan to build a chip plant in Zhuhai.
When approached by the 21st Century Business Herald Tuesday, the Taiwanese company declined to comment on the story.
Some industry insiders said it is possible for Foxconn to invest in Gree Electric in that they are both manufacturing companies and obsessed with chip ambitions and seeking new growth drivers beyond their traditional territories.
Last year, Gree Electric indirectly invested 3 billion yuan (447.0 million U.S. dollars) in Nexperia Semiconductors, the company's largest ever external investment to date.
However, home appliances industry observer Liu Buchen held an entirely different view, arguing that Gree Electric couldn't get much benefits from Foxconn's investment, as what the appliances maker needs is advanced governance structure and global distribution platform which Foxconn actually couldn't offer.
In Liu's opinion, Alibaba would be a better choice for Gree Electric. But in previous reports the tech giant has denied the possibility of a transaction.