MOSCOW (MRC) - Whirlpool, the world's largest maker of home appliances, has agreed to pay EUR758 million (GBR602.67 million) to buy a 60% stake in smaller Italian rival Indesit to further expand beyond its U.S. home market, said Reuters.
The acquisition of Indesit, which is a market leader in Italy, the United Kingdom and Russia, follows Whirlpool's purchase of a majority stake in China's Hefei Rongshida Sanyo Electric Co Ltd last year for USD552 million (GBR322.57 million).
Family-controlled Indesit, which produces washing machines, freezers and ovens, has been searching for eight-months for a buyer that would help it reduce its dependence on Italy and compete against cheaper products from eastern Europe and China.
The U.S. company has agreed to pay EUR11 a share in cash to the members of the Merloni family who control Indesit and will launch a bid for the rest of the company which is likely to be delisted after the buyout, according to sources.
Analysts said Europe, where growth in several countries is still very weak, is unlikely to boost Whirlpool's sales near-term, but the purchase could offer cost synergies and help margins, which are lower than Indesit's in the region.
Whirlpool says it is currently the fourth-biggest player in Europe, Middle East and Africa, where it made 16% of its USD19 billion global sales last year. "This will ideally position us for sustainable growth in the highly competitive and increasingly global home appliance market in Europe," Jeff M. Fettig, Whirlpool's CEO said in a statement.
The Merloni family began producing scales and other home appliances in the 1930s and in 1987, under the leadership of Vittorio Merloni, acquired the then bankrupt Indesit brand. Under their ownership, Indesit expanded abroad, most notably into Russia. But it was never able to make a mark beyond Europe. There have disagreements in the family over strategy for the company. The company posted a net loss in the first quarter, although it remains profitable at operating level.
Indesit has eight industrial sites in Italy, Poland the United Kingdom, Russia and Turkey and employs 16,000 workers. The Group’s main brands are Indesit, Hotpoint and Scholtes.
The combined 60.4% stake that Whirlpool is taking over from the Merloni family represents a 66.8 percent voting stake in the firm due to treasury shares held by Indesit.
Whirlpool said it plans to finance the deal, which it expects to close by year end, through existing cash and debt.
MRC