KKR, Li Ka Shing Compete for GOME Stake

Mon. May 25, 2009; Posted: 08:22 AM

SHANGHAI, May 25, 2009 (SinoCast Daily Business Beat via COMTEX) -- RBOB | Quote | Chart | News | PowerRating -- International private equity bellwether Kohlberg Kravis Roberts Co. (KKR)-led investment syndicate is likely to win the bid for the stake of GOME Electrical Appliances Holding Ltd. (0493.HK). Sources disclosed that KKR has established an investment consortium with Bain Capital, LLC, to acquire a 20% stake in GOME at up to HKD 3 billion. As one of the world's biggest private equity funds, this will not be the first time for KKR to make investment into a Chinese enterprise ever since its entry into the country in November 2006. In April 2007, KKR invested USD 150 million into Tianrui Group Cement Co., Ltd. in central China's Henan Province. Late last year, KKR was reported to pour USD 100 million into Mengniu Modern Animal Husbandry (Group), which is based Ma'anshan, a second-tier city in central China's Anhui Province, as a large-scale animal husbandry enterprise. The latter currently owns four modern animal husbandry production bases nationwide and is building another three such production bases for the moment. The group plans to establish 25 to 30 animal husbandry bases in the coming one to two years. Notably, Mengniu Modern Animal Husbandry (Group) decides to get listed in Hong Kong or in the United States in the future. Late last year, Wong Kwong Yu as the former board chairman of GOME was arrested for economic criminal cases. In spite of the crisis, GOME is still a valued investment target for its brand influence, market share and operating mode in the electrical appliance market in China's Mainland. Reportedly, Guo Guangchang and Li Ka Shing are also interested in GOME. The former is the Executive Director and Chairman of Shanghai Fosun High Technology (Group). Actually, Fosun had wanted to make some achievement in the retail sector for a long time and the company has contacted GOME at the beginning of this year. Also, Fortress of Li Ka Shing has shown strong interest in GOME. News said that Li Ka Shing has employed an investment bank to have negotiations with the China's Mainland-based home appliance chain operator. Li was guessed to buy a not more than 30% stake of GOME if possible. Currently, Li Ka Shing has several retail enterprises, such as Fortress, PARKnSHOP, Watsons, and so forth. Fortress also as a home appliance chain operator runs business in Hong Kong, Taiwan and Macao. (USD 1 = CNY 6.82) ]]> </paragraph>

Source: www.cb.com.cn (May 25, 2009)

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