Chinese major appliances manufacturer Hisense signed an agreement with the chairman of rival Kelon to purchase a 26.43 percent stake in the company, according to the Xinhua News agency. Hisense reportedly paid 900 million yuan (U.S. $111.2 million) to Gu Chujun, who is chairman of Guangdong Kelon Electrical Holdings Co. and chairman of Greencool, based in Beijing, to acquire the stake in Kelon owned by Greencool.
Kelon, maker of refrigerators and air-conditioners, has been plagued by scandal, lost sales, and manufacturing shutdowns in recent months. The problems stem mostly from accusations that fraud and embezzlement were committed by high-level Kelon executives – notably Chairman Gu Chujun, who was held and questioned in August for his role in the crisis.
Gu's acquisition of a 26.43-percent stake in Kelon in 2001 made him the controlling shareholder, but he is alleged to have embezzled Kelon capital for other mergers and acquisitions, creating a financial crisis for the company.
Hisense is based in Shandong, so taking over Kelon may give it a stronger South China presence. The company has historically been a maker of TVs but began production of air-conditioners in recent years, then acquired refrigerator manufacturers Beijing Xuehua Refrigerator and Nanjing Bole Refrigerator.
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