Hisense's 2.4 billion acquisition of Toshiba TVs leads to internationalization, but is accused of playing with fire

The acquisition of 95% of the shares of TVS, a subsidiary of Japan's Toshiba, by A-share listed company Hisense Electric (code: 600060) is seen as an important part of its internationalization strategy. However, on the first trading day after the announcement of the news, Hisense Electric opened high and fell, opened slightly higher and then surged, then the stock price fluctuated and fell, rebounded slightly in the afternoon and then fell again, closing down 0.45%, and finally reported 15.63 yuan.

Analysts told Blue Whale TMT reporters that this deal, valued at RMB 798 million, seemed like a good deal, but in fact the Toshiba TV assets acquired by Hisense were completely "financial garbage". Not only did its net debt on the books reach nearly RMB 900 million, but it also lost hundreds of millions every year! Originally, Hisense's net profit had fallen sharply for three consecutive months. Once the acquisition was completed, Hisense would be dragged into a huge loss.

RMB 798 million to support Toshiba's internationalization

According to the announcement of Hisense Electric, the acquisition price of RMB 798 million is 95% of the shares of Toshiba Visual Solutions, which is responsible for the development and production of "REGZA" brand TVs. Toshiba retains 5% of the shares. After the completion of this equity transfer, TVS will become a holding subsidiary of Hisense Electric and will obtain the 40-year global brand license of Toshiba TV.

As soon as the news came out, Japanese netizens expressed displeasure, saying that the price was lower than the transfer fee of a football player. However, according to financial data, the TVS acquired by Hisense Electric is actually a company with more debts than assets.

TVS's main financial data Unit: RMB 100 million

As of June 30 this year, TVS' total assets were RMB 737 million, while its total liabilities were as high as RMB 1.627 billion, and its net liabilities reached RMB 890 million. In addition to being insolvent, TVS is also suffering huge losses every year.

In 2016, TVS achieved total revenue of RMB 2.702 billion and a net loss of RMB 568 million; in the first half of this year, TVS achieved operating income of RMB 1.195 billion and a net loss of RMB 247 million in just half a year.

The direct cost of this transaction is RMB 798 million, but because Hisense Electric also needs to compensate TVS's RMB 1.63 billion debt, the total cost of the acquisition is approximately RMB 2.43 billion.

According to the announcement, the transaction was completed using the company's own funds. Hisense Electric's Q3 financial report shows that its current cash on the books exceeds RMB 2 billion and its debt-to-asset ratio is 40.8%. Although this does not put pressure on the company's funds, since Hisense Electric's net profit has fallen sharply for three consecutive quarters, the consolidation after the acquisition may bring a huge drag on Hisense's performance.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.