Shares of Shanghai-listed Qingdao Haier Co fell by the 10 percent daily limit on Monday, the first day the company's shares resumed trading following a suspension of more than three months due to a major overseas acquisition.
At the close, the shares were down 9.98 percent at 8.93 yuan ($1.36).
In order to boost confidence, the company spent nearly 50 million yuan to buy back 5.5 million shares on the same day, according to a statement the company sent to the Global Times late Monday.
The stock had been suspended from trading since October 19, 2015 due to a major asset acquisition, according to the company's filing to the Shanghai exchange in October.
There is little or no relevance between the company's share slump and the deal, said a Shanghai-based securities analyst surnamed Li.
"Qingdao Haier's stock is actually in a 'catch-up' fall," Li told the Global Times Monday. "During its three-month suspension, stock markets in the Chinese mainland suffered considerably, especially in the past month. Thus, the stock was bound to catch up with the general losses once trading resumed."
The benchmark Shanghai Composite Index lost 19.28 percent during the period from October 19 to Friday.
On January 15, the company announced that it would acquire the home appliance business of General Electric Co (GE) for $5.4 billion in cash, the third-largest acquisition of a U.S. company by a Chinese enterprise. The deal was also China's biggest overseas purchase in the home appliance sector.
Qingdao Haier will establish a joint integration team with GE Appliances, where GE Appliances' senior management and key employees will play a leading role, according to a statement the company issued on Friday. GE Appliances will remain based in Louisville, Kentucky, the statement said.
It also mentioned that the company will carry out a minor integration at GE Appliances, implementing measures such as ensuring the full participation of the management team from the acquired company, protecting and improving the brand value of the acquired company by establishing a brand committee mechanism, and sticking to policies of localization and independent operation.
"It is not uncommon to see minor integrations in mergers and acquisitions (M&As), because a comprehensive integration is quite challenging and unnecessary in most cases," Wang Yumin, a research fellow at Morning Whistle Group, a Shanghai-based provider of M&A information, told the Global Times Monday.
In the case of GE Appliances, the business itself is good, so there is no need to make too much change to a profitable asset, he noted.
The deal will be subject to "customary regulatory filings in China and antitrust approvals in the U.S., Mexico and Argentina," according to a Reuters report on January 15, which cited a person authorized to speak on behalf of Qingdao Haier.
Not long before the deal, GE abandoned a move to sell the home appliance unit to Sweden's Electrolux, after the proposed transaction was blocked by U.S. antitrust regulators.
Unlike Electrolux, Qingdao Haier has a high chance of getting regulatory approval, Wang noted, adding that Haier only has about 1 percent of the U.S. market, which is unlikely to cause much monopoly concern.
The merger between GE Appliances and Electrolux would have created a company holding two-thirds of the market, probably the reason behind regulatory opposition.
