Haier Sets Structural Adjustment Aug 29, 2006

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Haier Electronics Group Co. will buy the water heater and remaining washing machine businesses from parent Haier Group Corp, the Chinese mainland's largest home appliance maker, for HK$900 million (U.S. $116 million).

Haier Electronics will pay for the assets by issuing HK$240 million worth of new shares to its parent, it said in Bloomberg News report. It will also waive the U.S. $420 million sale price of its mobile handset business, which Haier Group bought in June, and forgive HK$60 million in debt.

The purchase is part of Haier Group's aim to turn its Hong Kong-listed unit into a flagship for its home-appliance businesses. Qingdao-based Haier Group sells products in the U.S. through Wal-Mart Stores Inc. and Home Depot Inc.

"Haier's washing machine business has done the best in a very competitive market in the mainland, but the returns and the margins for this industry are generally low," Gu Feng, an analyst with Shenyin Wanguo Securities Co, said.

Haier Electronics, which already makes washing machines, will buy the front-loading washing machine businesses from its parent.

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