Haier Smart Home Privatizes Haier Electronics to maximize resource allocation and synergistic effects

Haier Smart Home Privatizes Haier Electronics to maximize resource allocation and synergistic effects

Qingdao / Shanghai / Frankfurt, July 31, 2020 - Haier Smart Home Co., Ltd. (hereinafter called "HSH" or "the Company", 600690.SH/690D.DE) and Haier Electronics Group Co., Ltd (hereinafter called "HEG", 1169.HK) jointly announced that HSH plans to privatise HEG by way of a scheme of arrangement ("Scheme"), and put forward a proposal ("Privatisation Proposal") to the Scheme Shareholders for the privatisation of HEG.

Based on the Privatisation Proposal, HEG shareholders participating in the transaction (other than HSH and any of its wholly-owned subsidiaries) ("Scheme Shareholders" and each HEG Share held by a Scheme Shareholders is a "Scheme Share") will receive 1.60 new HSH H Shares for each Scheme Share as well as a cash payment of HK$1.95 per Scheme Share ("Cash Payment") if the Scheme becomes effective. Upon the Scheme becoming effective, HEG will become a wholly-owned subsidiary of HSH and HSH H Shares will be listed on the Hong Kong Stock Exchange by way of introduction (the "Introduction"). The Scheme and the Introduction are conditional on each other. Upon the Scheme becoming effective and the Introduction being approved, HSH will become a "A+D+H" listed company (a company listed in China "A", Germany "D" and Hongkong "H").

After completion of the transaction, the organization structure, shareholding structure as well as financial performance of the Company is expected to be optimized. Meanwhile, HSH and HEG will work together on further increasing the synergy across different product categories and throughout the whole process, sharing the platform for smart home business and deepening online and offline integration, in a bid to provide users with the best customized service in the full lifecycle and accelerate the implementation of the Smart Home Experiential Cloud Strategy.Reasonable Premium and Benefits beyond Win-win increase shareholders returns

After the transaction is completed, Scheme Shareholders will become the shareholders of HSH in the future, holding the shares of a high-quality white goods listed company, and continuing to enjoy the shareholder returns brought by the implementation of HSH's future strategy as well as the synergistic effect after integration, so as to achieve benefits beyond win-win.

According to the valuation report prepared by Platinum Securities (HSH's independent valuer), the mid-point value of each HSH H share is estimated at HK$18.47. On such basis, the total value of the HSH H Shares and the Cash Payment to be received by the Scheme Shareholders per Scheme Share is approximately HK$31.51, representing a premium of approximately 42.65% to HEG's average closing price of HK$22.09 for the 30 trading days before the issue of the possible privatization announcement on 16 December 2019, and a premium of approximately 28.34% to HEG's average closing price of HK$24.55 for the 30 trading days before the issue of the privatization announcement on 31 July 2020. The Scheme Shareholders will enjoy the benefit of an integrated HEG and share the potential synergistic effect arising from the further integration of HSH and HEG. Scheme Shareholders will also be able to partly monetize their investments in HEG through the Cash Payment.

After completion of the transaction, with improved capital management and operational efficiency, HSH plans to increase the dividend pay-out ratio to 40% within three years on the basis of net profit attributable to parent company's ordinary shareholders which means a significant improvement compared with the 30% pay-out ratio of recent years, in order to enhance returns for all shareholders.

New prospect of creating smart home after the in-depth integration of the capital market

Previously, because of shareholdings and organizational structure of the two listed companies, the efficient utilization of resources were reduced to a certain extent, thereby curbing their operational efficiency. Especially at the time that HSH needs to build up a single platform as the part of Experiential Cloud Strategy, the Proposed Privatisation is an answer to these challenges and perfectly meet longing market expectations.

After the completion of the Proposed Privatisation, the Company will further optimize organization structure and simplify decision-making processes and increase the operational efficiency, which helps bring synergies, strengthen competitiveness, as well as maximize returns for shareholders.

On one hand, the synergistic effects in R&D, manufacturing and distribution are expected to reduce HSH's operation costs and improve its asset utilization and financial structure; on the other hand, HSH will further enrich smart home solutions portfolio, and advance the digitalization of the whole industrial chain, thus facilitating the implementation of Smart Home Experiential Cloud Strategy. Besides, since HSH has built world-class brand portfolio and strong global presence, HEG could accelerate the overseas expansion of its existing washing machine, water heater and water purifier businesses by virtue of HSH's global layout, in a bid to gain higher returns for its shareholders.Focus on and Acceleration of the Smart Home Experiential Cloud Strategy Following the "RenDanHeYi"(人单合一 in Chinese means "Maker-Customer Integration") model, an innovative management model initiated by Haier, HSH insists on the implementation of Smart Home Experiential Cloud Strategy with emphasis on "Scenarios and Ecology instead of Products and Industries". As a global leader in the IoT field, HSH dedicated to delivering seamless smart home experience to worldwide users.

First, HSH has upgraded traditional household appliances into high-end interconnected smart devices to underpin full-suite smart home solutions covering smart kitchens, smart balconies and smart bedrooms through full living ecologic services in clothing, dining, sheltering and entertaining.

Second, Smart Home Experiential Cloud has created a platform connecting billions of families to benefit all users, businesses and the ecology. Based on its strong brand appeal, the Company has developed a cloud-driven platform for smart home experience by connecting thousands of resources providers in different industries, aiming to build an ecological brand in the IoT era centering on the best customer experience; moreover, it has incubated several sub-platforms like the Internet of clothes, Internet of food and Internet of air, and created entries such as Haier Smart Home APP and Store 001 by integrating both online and offline contact networks, providing all kinds of users with solutions and care from home design, construction and services.

Once the Proposed Privatisation is completed, the Company will utilize IoT, big data, cloud computing, artificial intelligence and 5G to optimize product portfolios and make products more convenient and interactive for users' better life; and through the accelerated implementation of Smart Home Experiential Cloud Strategy, HSH will realize the strategic visions of customizing wonderful life for millions of users.

Through continuous innovation and transformation, HSH will establish an "A+D+H" platform in capital markets and continue global business expansion. The successful Experiential Cloud Strategy will bring more benefits to shareholders globally.

HSH has appointed CICC and J.P. Morgan to act as its joint financial advisers, Clifford Chance LLP and King & Wood Mallesons as legal advisers in connection with the Privatisation Proposal and the Scheme, and Sullivan & Cromwell (Hong Kong) LLP and Zhong Lun Law Firm are legal advisers to the joint financial advisers; HEG has appointed UBS as its financial adviser and Fangda Partners as legal adviser in connection with the Privatisation Proposal and the Scheme.  

About Haier Smart Home Co., Ltd.: Haier is one of the world's leading manufacturers of household appliances with a focus on smart home solutions and customized mass production. Haier Smart Home Co., Ltd. develops, produces and distributes a wide range of household appliances. These include refrigerators, freezers, washing machines, air conditioners, water heaters, kitchen appliances as well as smaller household appliances and an extensive range of intelligent household appliances. The Company distributes its products through leading household brands such as Haier, Casarte, Leader, Candy, GE Appliances, AQUA and Fisher & Paykel.

IR contact: Yao Sun (Sophie) - Haier Smart Home Germany T: +49 6172 9454 143 F: +49 6172 9454 42143 M: +49 160 9469 3601 Email: y.sun@haier.de