WELLINGTON, New Zealand (AP) — China's growing economic reach in the South Pacific took another step Monday when home appliance giant Haier indicated it would make a full takeover offer for much smaller New Zealand competitor Fisher & Paykel Appliances.
Haier already owns 20 percent of Fisher & Paykel, which also manufactures home appliances including stoves, refrigerators, washing machines and dishwashers. The 78-year-old New Zealand company was hailed locally for decades as a success story, although it has struggled in recent years against tough market conditions and a high New Zealand dollar.
Any takeover bid would come as a blow to New Zealand pride and could jeopardize jobs in the country of 4.4 million. However, the country's economic fate is increasingly tied to China. The two countries have a free trade agreement and New Zealand relies on China to buy many of its agricultural products.
The news on Monday sent Fisher & Paykel shares up 33 percent to 1 New Zealand dollar (81 cents), placing the company's value at about 724 million New Zealand dollars ($586 million).
Fisher & Paykel said in a statement that Haier plans to make a cash offer, which would be at a premium to Fisher & Paykel's share price before the announcement. Haier has yet to make a formal offer.
Fisher & Paykel chairman Keith Turner said Haier has been in recent discussions with the company's major shareholders and that he expects any bid from Haier would come within the next few days. He said the board has not been privy to those discussions and won't make any recommendations to remaining shareholders until it finds out more details.
A Haier representative could not be immediately reached Monday.
Turner said Fisher & Paykel employs about 3,400 people worldwide, including 1,100 in New Zealand, and manufactures about 1.5 million appliances each year. The company is dwarfed by Haier, he said, which makes about 70 million appliances each year. He said it was too early to predict what impact a takeover might have on New Zealand employees, and that for now, it was business as usual.
Haier employs 80,000 people and has annual revenues of more than $23 billion.