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Bain, GOME Agree On $432m Stake Sale « Back
Claire Spencer, June 2009

m>(23 June 2009)

US-based private equity firm Bain Capital announced yesterday that it had agreed to invest up to $432m to acquire a minority stake in the Chinese home appliance retailer GOME, according to a report in the New York Times. When complete, it will be one of the largest US investments into a mainland Chinese company.

The report states that under the terms of the deal, Bain will invest around $233m into a convertible bond, and purchase as much as $199m worth of new shares in the company, depending on how many of those shares are taken up by existing shareholders.

Consequently, Bain will own between 9 percent and 23 percent of GOME after the deal is completed.

The deal has been talked about for a number of weeks now, and its confirmation will be a welcome development for GOME, which has been struggling due to a combination of weakened sales and an ongoing investigation into its founder and former chairman Huang Guangyu, who has been detained on corruption charges since November.

After fees, GOME expects to raise $417m, which will be used to strengthen its balance sheet, says the New York Times.

Shares in GOME have been suspended since the arrest, but according to the report, they will resume trading today.

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