A man walks past the logo of Toshiba Corp in Tokyo. Reuters

Final details of deal, which could be worth $1 billion, have yet to be hammered out

Chinese leading home appliances manufacturer Midea Group Co Ltd said on Thursday it is buying Japanese electronic giant Toshiba Corp's white goods business.

The two companies jointly announced that they have signed a memorandum of understanding on Toshiba's sale to Midea of a majority interest in its home appliance business. Japan's Nikkei reported on Tuesday that the sale will be worth more than $1 billion.

A definitive agreement is expected to be finalized by the end of this month, with the two companies negotiating details, Guangdong-based Midea said in a statement on Thursday.

Upon completion of the transaction, Toshiba's home appliances business will continue to develop, manufacture and market white goods, such as refrigerators, washing machines, vacuum cleaners and other small domestic appliances under the Toshiba brand name, according to Thursday's statement.

Midea said acquiring Toshiba's white goods business is a key step in its globalization, and the transaction will further promote Midea to be a leader in the Asian and global white goods market and enhance its global competitive capacity.

In the past 20 years, Toshiba and Midea have built a strong relationship in a number of areas, including compressors, small domestic appliances and inverters. The proposed transaction is expected to further enhance the collaboration of the two companies.

Toshiba reported a loss due to accounting fraud last year.

It announced a rebuilding initiative last year, which includes the potential reorganization of its home appliances business, and stepped up its transformation into fields such as elevators, intelligent buildings and nuclear power.

Established in 1968, Midea had a total revenue of $23 billion in 2014, and is seeking acquisition targets as part of its global expansion plan, said Yuan Liqun, vice-president of Midea Group.

The company is seeking deals that can help it improve its technology, brand and global distribution channels.

Zhang Yanbin, assistant director of All View Cloud, a Beijing-based consultancy specializing in home appliances, told China Daily: "Midea hopes to improve its manufacturing capacity by means of acquiring Toshiba, learn about Toshiba's expertise in refinement of manufacturing, and step up its expansion in the global market."

Zhang added that Midea could gain an upper hand in global competition due to the acquisition, and the company and his competitor Haier Group will strengthen their dominant positions in global white goods business through overseas acquisitions.

In January, Haier agreed to buy General Electric's home appliances business for $5.4 billion in cash.

Midea had a 17.1 percent global market share in 2015, followed by Qingdao-based Haier with 7.9 percent, London-based market-research firm Euromonitor International data show.

The rise of homegrown Chinese home appliances makers has hurt Japanese electronics giants badly, pushing the latter into B2B areas, such as construction, nuclear power, housing and automobiles.

fanfeifei@chinadaily.com.cn