Is ‘Iron Lady’ Dong Mingzhu’s Gree Electric facing an ownership shake-up? Air con giant plans partial stake transfer
- The ‘partial stake transfer’ could result in a change of the ownership structure in the country’s largest air conditioner manufacturer
- The government is the largest shareholder with an 18.22 per cent stake, while Dong is the biggest individual shareholder
Gree Electric Appliances, the air conditioner giant chaired by one of China’s best known and toughest businesswomen, said its state-owned controlling shareholder was planning a “partial stake transfer”, which could result in a change of the ownership structure.
Gree Electric is controlled by the Zhuhai city government, which owns 100 per cent of the Gree Group. Gree Group was the biggest shareholder of Gree Electric with an 18.22 per cent stake as of the end of September.
The company’s biggest individual shareholder and 10th overall is chairwoman Dong Mingzhu, known throughout China for her steely resolve and feared by business rivals. Sometimes referred to as the Iron Lady and well known for her outspoken remarks, she is famed for her inspiring rise through the company’s ranks to become the boss in 2001.
Hebei-based Jinghai Guarantee Investment, owned by Gree Electric’s major distributors, is the second largest stakeholder, with 8.91 per cent.
Other major shareholders include institutional investors like China Securities Finance, Qian Hai Life Insurance, state investment firm Central Huijin Investment, China Life Insurance, and the National Council for Social Security Fund.
Dong, 65, holds a 0.74 per cent stake, or 44.4 million shares.
“The deal is subject to pre-approval by the state asset supervision and administration authority,” Zhuhai-based Gree Electric said in a filing to the stock exchange on Monday.
The company did not elaborate on how the ownership structure may be changed.
Gree said in Monday’s filing that buyers will not be confirmed until the process of state asset transfer is completed.
Gree Electric’s current ownership is already widely dispersed, with the largest shareholder controlling just 18 per cent. If the Zhuhai government were to transfer a partial stake – in the region of 5 to 10 per cent – to any other party, the company could end up with no single party holding absolute control. In that case, the balance of power would shift towards the management team.
Dong has clashed with the company’s controlling shareholder in the past. In 2016, the Zhuhai city government removed her from her post as chairwoman of Gree Group without offering an explanation for the move. She remained chairwoman of Gree Electric.
In January, Dong was re-elected for another term as chairwoman of Gree Electric. She had been chairing the company since 2012.
“The re-election of Dong Mingzhu and other board members has solved hidden uncertainty issues surrounding the management,” Chen Bo, an analyst at Orient Fortune Securities, wrote at the time.
“In the longer run, a stable governance structure will enhance the company’s attractiveness to long funds.”
Alibaba Group Holding, which owns the South China Morning Post and is a strategic partner with Gree on its Tmall website, denied rumours on Monday it was buying a 5 per cent stake in the home appliances manufacturer. “We are aware [of the rumours]. It’s not true,” said a spokesperson.
Trading of Gree Electric’s shares was halted on Monday on the Shenzhen Stock Exchange.
The shares closed at 47.21 yuan before the suspension, giving the company a market cap of 284 billion yuan (US$42.3 billion).
The news about Gree Electric sparked buying of related companies and the home appliances sector in Hong Kong and mainland China on Monday.
Wingtech Technology, a semiconductor maker in which Gree has recently invested, soared by its maximum allowed 10 per cent limit to 33.08 yuan on the Shanghai Stock Exchange.
On the Shenzhen exchange, Kelon also surged by 10 per cent to 14.81 yuan. Wuxi Little Swan gained 9.6 per cent to 62.40 yuan. Midea Group rose 8.6 per cent to 52.93 yuan. Joyoung and Xinbao Electric rose 8.7 per cent and 8.4 per cent to 25.08 yuan and 14.09 yuan, respectively. Guangdong Homa Appliances added 5.6 per cent to 7.15 yuan.
In Hong Kong, Hisense Kelon Electrical Holdings gained 8.7 per cent to HK$12.00.
