Whirlpool Acquires 60% Stake in Indesit
Italian Firm Changes Hands: Whirlpool Acquires 60% Stake in Indesit
Whirlpool WHR.N is the world's biggest maker of home appliances. It has agreed to pay 758 million euros or around $1 billion to purchase a 60% stake in Italian rival Indesit IND.MI to grow beyond its home market in the US. The deal is the latest in a line of many acquisitions of Italian companies as the nation battles its biggest recession in 70 years.
The acquisition of Indesit follows Whirlpool's acquisition of the majority stake in Hefei Rongshida Sanyo Electric Co Ltd. Indesit is the market leader in not only India but Russia and the UK as well. Whirlpool acquired Chinese Hefei Rongshida Sanyo Electric Co Ltd 600983.SS in the past year for $552 million.
Indesit controlled by a corporate family is on of the top produces of washing machines, freezers and ovens. It had been searching for over 8 months for buyers that would help it to lessen dependence on Italian markets and gain cheaper products from China and eastern Europe.
The US firm has paid around 11 euros per share in cash to members of the Merloni family who control Indesit. The bid for the remaining part of the company will be launched even as the firm is likely to be delisted following the buyout.
Analysts at Europe said because the growth in several countries is very weak, this is unlikely to boost the sales of Whirlpool in near term though the purchase could encash on cost synergies and aid margins. Currently, Whirlpool does not compare well to Indesit in this part of the world.
Whirlpool has indicated that it is the 4th biggest player in Europe, Middle East and Africa. It has made 16% of its $19 billion global sales last year. This will position us for the sustainable growth in a market that is both hugely competitive and international in every way, according to a statement issued by Jeff M. Fettig, the CEO of Whirlpool.
The offer price indicates a premium of 4.5% to Indesit's close. The stock rose by as much as 3.5% on the basis of the deal announcement. Indesit's past is quite colorful as well. The Merloni family produced scales and other home appliances in the 1930s. In the year 1987, Vittorio Merloni acquired the Indesit brand when it was facing bankruptcy. Indesit expanded abroad as well into Russia but it could never move beyond Europe.
Sources have been quoted as saying all is not well within the family as there are disagreements over strategy. Though the company posted a net loss in the first quarter, it remains profitable at operating level.
The Merlonis have explored options for the stake since last year though activist investor Amber has been pushing for a tie-up to boost the company and foreign investors have been much in demand. Indesit has 8 industrial sites in Italy, Poland, the UK, Russia and Turkey. It has around 16,000 workers. The main brands are Indesit, Scholtes and Hotpoint. The 60.4% stake taken over by Whirlpool from the Merloni family has a 66.8% voting stake in the firm due to treasury shares held by Indesit. With the Italian firm now heading to US ownership, yet another corporate in the EU nation passes into foreign hands. In times as grim as these for the EU, maybe there is a silver lining in the cloud, but it is clearly not visible right now.
