Another Japanese home appliance giant fell.
Following Sanyo and Sharp's sale, on November 14, 2017, Toshiba Corporation of Japan was forced to sell its century-old television business in order to avoid being forced out of the market. Yes, China Hisense Group acquired Toshiba TV's package business and 40-year global brand license for only 12.9 billion yen.
In the 1980s, Japan was once known as the "TV Kingdom," and a group of world-renowned home appliance companies such as Toshiba, Sanyo, Hitachi and Sharp emerged. The 142-year-old Toshiba is one of the best. It used to be the first color TV commercial chemical plant and also the world’s first naked-eye 3D TV company. The Toshiba brand has become a household name in China, setting a vision for selling 18 million LCD TVs each year.
But now, this former home appliance giant is in deep business crisis and losses year after year, and is forced to sell assets in a hurry in order to avoid a delisting crisis. This is Toshiba's last traditional home appliance business. Whether this transaction will ultimately protect Toshiba from bad luck is not yet known, but for the rapidly rising China Hisense, collaboration through brands, technologies, and production teams has greatly accelerated the pace of globalization.
This shocked industry merger and acquisition shows a clear trend of global industrial migration. On the one hand, the most profitable processing and manufacturing sectors are moving from China and moving to Southeast Asia, Africa and other "costly markets." On the one hand, Chinese enterprises have entered a higher level through mergers and acquisitions and began to compete for the global market and establish a free brand.
TV business sells
Two weeks ago, Toshiba President Gang Chuanzhi just had tears in the shareholders’ meeting to apologize to shareholders for selling semiconductor assets. “A sincere†apologized; half a month later, when he signed a chilling contract again, it would be nearly a hundred years. When the history of the Toshiba TV business was sold to China Hisense Group, I did not know what it was like.
On November 14, 2017, Hisense Electric (600060) and Toshiba Corporation announced in Tokyo that Toshiba officially transferred 95% of its share of Image Solutions Corporation (Toshiba Visual Solutions Corporation) to Hisense. The remaining 5% of the shares are still reserved by Toshiba.
According to the transfer agreement signed by both parties, Hisense Electric (600060) will pay its own funds of 12.916 billion yen (approximately RMB 798 million) for this transaction. After the completion of the transfer, Hisense Electric will enjoy a package of Toshiba TV products, brands, operating services, etc., and has 40 years of global Toshiba TV brand authorization (excluding Europe, Southeast Asia and other regions).
Toshiba's involvement in TV business began a hundred years ago. As early as 1927, Toshiba produced the world's first camera tube capable of displaying television pictures; in 1960, Toshiba became the first Japanese manufacturer to commercialize color television. Toshiba produced the world's first in 2010. Model naked eye 3D TV. From the analog era to the CRT era to the LCD era, Toshiba, which has a history of 142 years, has led the technological trend in Japan and the world in the field of display technology. For a hundred years, television is Toshiba's absolute pillar industry, creating its former glory. “Toshiba, Toshiba, Toshiba in the new era!†has made many consumers around the world familiar.
Until 2010, Toshiba has set a grand goal of “18 million LCD TVs sold worldwide in 2011â€. However, the Fukushima nuclear accident that shocked the world in March of this year became the watershed of Toshiba’s profit and loss.
The entire Toshiba Group suffered a sudden blow.
Originally, in February 2006, Toshiba’s nearly 5.4 billion U.S. dollars nearly tripled its purchase of Westinghouse Electric at a premium and began to enter the field of nuclear power. The sudden explosion of the Fukushima nuclear explosion in 2011 caused the nuclear power industry to quickly freeze. The Japanese government immediately shut down all nuclear power plants, and the world has ushered in a wave of nuclear power plant shutdowns. Toshiba’s huge nuclear-powered bets have been hit hard.
Dragged down by the nuclear power business, Toshiba’s 2015 loss of US$4.4 billion was the largest loss in history; in 2016, Westinghouse’s huge loss allowed Toshiba's goodwill impairment loss to reach US$6.1 billion in the same year, which directly contributed to Toshiba’s 2016 investment. The debt amounted to 552.9 billion yen. Recently, Japan’s Toshiba has publicly stated that it will have a net loss of approximately US$1 billion in the 2017 fiscal year ending in March 2018. This means that if the fiscal year 2017 can not turn losses, Toshiba will have to exit the market.
In order to avoid bad luck, Toshiba President Gang Gangzhi just last year had to sell assets to improve financial statements. As Japan's largest semiconductor manufacturer, Toshiba was forced to sell its precious semiconductor chip business for $18 billion to an international consortium led by Bain Capital of the United States.
However, Toshiba’s international market share is as high as 20%. Affected by the review of Japan’s and international “anti-monopoly lawâ€, the market generally believes that the sale cannot be completed before the end of March 2018, and cannot be accompanied by the delisting of Toshiba by the Tokyo Stock Exchange. deadline. To save himself, Toshiba must sell other assets as soon as possible. In desperation, the century-old television business became a means of Toshiba's self-help.
In April 2017, the media successively broke out with Toshiba and China Hisense, Turkey Vestel, etc. to sell television services for confidential talks. Since then, Toshiba at the negotiating table has been caught in a dilemma - both forced by deadlines, eager to sell, and afraid that prices are too low to compensate for losses. This will inevitably be used by negotiating opponents to exchange time for more favorable conditions.
In the end, on November 14th, Hisense took down Toshiba TV's business by paying its own consideration of 12.916 billion yen. According to the announcement of Hisense Electric (600060), the date of delivery is expected to be 28 February 2018 at the earliest. It is precisely within the deadline for Tokyo Stock Exchange to impose Toshiba's delisting.
Can Toshiba, who is at risk, really get out of the delisting doom at the last moment?
Industrial migration
Whether it is for Toshiba, which is eager to save itself, or China Hisense, which is rising rapidly, perhaps this transaction is a “best choice†today.
On the one hand, Toshiba’s TV business has shrunk dramatically in recent years. As early as 2015, Toshiba TV shut down its overseas manufacturing plants and severely abolished its employees. It sold European, Southeast Asian and other regional brands (with expiration dates ranging from 2019 to 2021), and staged an international retreat. Compared with sales of tens of millions of units during its peak period, TVS' operating revenue for fiscal year 2016 was only 2.702 billion yuan, and net profit was 568 million yuan, a drop of tens of times.
Toshiba frankly stated that “Toshiba has difficulty in investing more resources alone, and it is also difficult to maintain its competitiveness. In order to improve the competitiveness and corporate value of TVS and promote the sustainable development of the imaging business, Toshiba believes that the best option is to have excellent work together. Hisense with strong operating capabilities and resources."
On the other hand, for Hisense, as the chairman of Hisense Group and Liu Hongxin, chairman of Hisense Electric, said, “after the acquisition, Hisense will integrate the R&D, supply chain, and global channel resources of both parties to quickly increase the market size and greatly accelerate the internationalization process. â€
According to Hisense Electric’s acquisition of Toshiba’s business plan, the company will further expand the company’s global presence in R&D, branding and marketing of the TV business, integrating the research and development, supply chain and global channel resources of the two parties, and displaying and lengthening each other’s display technologies. Leverage the power to fully enhance the company's global influence and overall competitiveness.
How does the synergy effect of the two brands play, Hisense Electric stated that Toshiba TV has a profound technology accumulation in image processing, picture quality chips, audio, etc., and Hisense TV in smart technology and content operation services, as well as laser televisions, etc. With leading edge, both parties can supplement each other. At the same time, Hisense has the cost advantage and scale effect of procurement and manufacturing. After the acquisition, sharing the supply chain resources with Toshiba TV can increase the market competitiveness and profitability of Toshiba TV products.
"The development of Chinese companies from the domestic to the global level is not a single factor that can be achieved. It must complete the overall layout of the three major systems of manufacturing, branding, and technology research and development." Luo Qingqi, a senior director of Pare Consultancy, pointed out that a company's global layout It requires a unified plan, which country to build the plant, which regional markets to cover, and what kind of patented technology and R&D team each factory supports, and how many brands can use it in a reasonable way. He believes that Hisense's acquisition of Toshiba TV should also be a comprehensive consideration based on three major factors.
For example, Toshiba has OLED technology, and Hisense has always advocated the ULED technology path. Mergers and acquisitions will enable Hisense to hold two different liquid crystal technologies at the same time, and the R&D is more balanced; after that, Hisense has obtained Sharp's 5 year brand authorization in the North American market, seeing 2020. The Toshiba brand will also serve as a timely replacement when the year is about to expire. According to IHS data, Toshiba TV ranks third in sales in the Japanese market in 2016. After the transaction was completed, the cumulative market shares of Hisense and Toshiba exceeded 20%... ...
Since 2015, Hisense's internationalization strategy has accelerated. After the merger and acquisition of Sharp's North American business and sponsorship of the European Cup, the market share of Hisense TV has ranked the world's top three, behind only Samsung and LG. With Sharp selling itself, Panasonic retiring, Hitachi Micro, and Toshiba selling, the "three-nation killing" of the color TV industry in Japan, South Korea and Japan evolved into a competition between China and South Korea.
“From mergers and acquisitions, the global home appliance industry has a clear shifting trend.†Wu Xianjian, the deputy secretary-general of the China Household Electrical Appliances Association, pointed out that in the past, the industrial chain division was made by Chinese companies, Japan and South Korea took control of the brand and market, and the European and American giants controlled the core technology. Today, on the one hand, the least profitable processing and manufacturing links move from China to Southeast Asia, Africa and other “costly†migrations. On the one hand, Chinese companies have risen to higher levels through mergers and acquisitions, and they compete for the global market and establish their own brands.
On the day of M&A, according to the medium-term plan announced by Toshiba, Toshiba focused its energy, electronic components, ICT (information and communication technology) solutions, and social infrastructure on key business areas, and concentrated its investment in management resources.
According to Wu Xianjian, even though Japanese companies have experienced a major collapse in the "TO C" machine consumption field, they must also see Japanese companies turning to the upstream "TO B" link and specializing in the research and development of key components to occupy the entire source of the industry chain. . The rise of Chinese companies still has a big gap in the technological R&D system.