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KKR Takes 10% Stake in Qingdao Haier Valued at $550M

NEW YORK ( TheStreet) -- KKR (KKR - Get Report) is taking a 10% stake in home appliance manufacturer Qingdao Haier, in a long-term strategic partnership between the private-equity firm and the Chinese conglomerate.

KKR's 10% stake was valued at about $550 million, according to a source familiar with the transaction.

The deal Monday is significant in both the size of KKR's minority investment and as an endorsement of Qingdao Haier's growing global operations. The long-term partnership between the two firms appears aimed at leveraging KKR's operational skills as Qingdao Haier looks to invest in its online retail businesses.

Qingdao Haier specializes in home appliance categories such as refrigerators, washers, air-conditioners and water heaters. The company had sales of $13.05 billion and net income of $534 million in 2012.

"KKR's investment is a strong endorsement of our past achievements and future potential," Qingdao Haier Chairman Liang Haishan said in a statement.

"By the end of 2012, the company entered the crucial 'online' strategic phase of its long-term growth plan. We welcome the world-class investment firm KKR to become our long-term strategic partner which will help us effectively execute our growth strategies," he added.

Founded in 1989, Qingdao Haier transformed from an insolvent collectively owned factory on the brink of bankruptcy to become a global player in the appliances home appliance market. The firm competes against General Electric (CE), Whirlpool (WHR - Get Report), Frigidaire and Maytag and is now the top global brand by market share in the home appliance market.

Qingdao, Shandong-based Haier has expanded rapidly in the U.S. The company attempted to buy Maytag in June 2005. However, it lost to Whirlpool in a highly watched bidding war. In 2012, sales outside of China topped 11%, according to Bloomberg data. Refrigerators are currently Qingdao Haier's largest source of revenue, while Logistic Services represents the firm's fastest growing business line, the data show.

"Qingdao Haier is one of the most respected Chinese companies with a market leading position, an outstanding historical track record and an outstanding management team. We are delighted to have the opportunity to partner with such an excellent company," David Liu, CEO of KKR Greater China, added in a statement.

-- Written by Antoine Gara in New York.

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