Chinese companies are increasingly interested in acquiring American businesses. The largest to date was Lenovo's acquisition of IBM's (ticker: IBM) PC business. Now Haier is bidding (along with a number of private equity firms) for US appliance maker Maytag (ticker: MYG). Here is the rationale behind these moves:
The Wall Street Journal. Chinese appliance maker Haier and private-equity funds Blackstone Group and Bain Capital are hoping to acquire US appliance maker Maytag for $16 a share. Haier's move is an effort to acquire well-known Western brand names and greater distribution for its products. Haier enjoys low-cost manufacturing and tons of cash.
- Slate. As a strategic buyer Haier is focused on Maytag's cash on hand and brand name. Haier is interested in Maytag's intangible assets including brand, management, washing-machine-making experience, and distribution relationships. While an American strategic buyer might view Maytag's assets as damaged, Haier sees Maytag's tarnished good name as a vast improvement over what it has. It can take decades and tons of money to build name recognition among US consumers. Haier can buy these quickly even with a premium and possible breakup fee.
Business 2.0. As part of the Chinese government's "go global" initiative Chinese companies are seeking US companies for acquisition. China is flush with cash and looking to load up on corporate assets. American brands, manufacturers, and distributors are the main targets. The Chinese are intent on cutting out the middle man. Some experts predict that Shanghai Automotive Industry might scoop up a car-parts firm like Delphi (ticker: DPH) or a
division of a big automaker.
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