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China's home appliances maker Midea Group is close to disclosing a takeover offer for German industrial robot maker Kuka AG, according to people familiar with the matter, a move that could become one of the largest unsolicited approaches of a foreign company by a Chinese buyer.

Based in Southern China's Guangdong province, Midea could announce its offer for Kuka as early as Wednesday, two of these people said, adding it is prepared to pay a 30% premium to Kuka's three-month average share price.

Such an offer would value Kuka at roughly €4.4 billion ($5 billion).

One person familiar with the matter said that Midea is looking at increasing its stake to above 30%, but doesn't necessarily seek to gain more than 50% or buy Kuka altogether.

Midea couldn't be reached for comment late Tuesday, while a spokeswoman for Kuka declined to comment.

Midea Group increased its stake in Kuka in February to 10.2%, making it the Ausburg-based company's current second largest shareholder.

Founded in 1968, Midea Group owns some of China's top air-conditioner, refrigerator and washing machine brands. The Shenzhen-listed company increased its overseas activity in the past year. It announced a deal in March to acquire a controlling stake in Japanese conglomerate Toshiba Group's consumer-electronics arm for about $473 million, after losing out in the bidding race for General Electronics Co.'s appliances unit earlier this year, according to people with knowledge of the matter. GE sold the business to another Chinese company, Haier Group for $5.4 billion.

Midea reported a net profit of 3.9 billion yuan ($598 million) in the first quarter.

Founded in 1898 in Southern Germany, Kuka is one of Germany's leading companies focused on the digitization of industrial manufacturing processes, also known as the fourth industrial revolution.

The trend of creating fully automated and networked production facilities that put together cars or machines with little human help is one of German Chancellor Angela Merkel's favorite topics.

Kuka's operations fit well with China's current growth plan that includes acquiring foreign companies in sectors like robotics. More than half of Kuka's revenues of €3 billion last year came from the U.S. and China.

For Kuka, stronger ties to Midea could help to increase revenues in China, one of the cornerstones in the company's growth strategy. Kuka aims at roughly double its revenue to between €4 billion to €4.5 billion by 2020, compared with 2014.

Midea first bought a 5.4% stake in Kuka in August 2015. A buyout of Kuka, should Midea opt to do so at a later point, could be complicated given the company's shareholder structure. German privately held engineering company Voith Group holds 25% in Kuka, with another 10% being held by German billionaire Friedhelm Loh via his holding company.

Write to Kane Wu at Kane.Wu@wsj.com and Eyk Henning at eyk.henning@wsj.com

(END) Dow Jones Newswires

May 17, 2016 13:05 ET (17:05 GMT)

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