TCL Placed on File by CSRC for Illegal Acquisition of Homa Group

Home appliance maker Homa Group announced on August 29 that Chinese electronics firm TCL, the company’s controlling shareholder, received a notice of being put on record by the China Securities Regulatory Commission (CSRC), suspected of violating securities laws and regulations in the acquisition process of the company.

The company said that the situation would not affect its right of control, nor will it affect its operations.

Homa, the firm’s subsidiary, is one of the leading refrigerator export enterprises in China. On January 14, 2021, TCL won 40.4743 million shares of Homa Group through an online judicial auction. On February 2, 2021, the share-holding ratio of TCL and its persons acting in concert increased to 10%, and it further increased to 15.57% on February 24.

On May 10, 2021, the firm announced that its controlling shareholder had changed to TCL. After taking control, TCL and its persons acting in concert increased their holdings of the company through the capital market several times. By the end of June 2022, TCL held 48.05% shares of Homa Group.

The industry has estimated that after the acquisition, TCL may take the firm as the listing platform of its home appliance business. At present, the CSRC has filed a case against TCL for allegedly illegally acquiring the company, which may influence the integration and listing process of TCL’s home appliance business.

According to the latest semi-annual report by Homa Group, its operating income during the reporting period was about 3.927 billion yuan ($570 million), down 18.3% year-on-year, and its attributable net profit was about 156 million yuan ($22.54 million), up 160.78% year-on-year.

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Since TCL has become the controlling shareholder for more than one year, it has also made many capital moves towards the group. Specifically, the company disclosed on December 15, 2021, that it had terminated all financial technology business segments and disposed of related assets, mainly focusing on the refrigerator business. As for the reasons why the company’s net profits turned losses into gains in the first half of 2022, the firm said that the main reason was that the company has fully returned and focused on the refrigerator business, while related businesses have been developing steadily.