Whirlpool to Buy 51% Stake in Chinese Appliance Maker for USD 552 mn
OREANDA-NEWS. Employees install parts on washing machines as they travel down the assembly line at the Whirlpool Corp Clyde operations plant in Clyde, Ohio.
Sanyo is the far-sighted winner in a merger between two of world's leading manufacturers of major home appliances - US-based Whirlpool Corporation and China-based Haier Group.
"Sanyo just lines USD 230 million into its pockets thanks to Tuesday's acquisition deal, which values nearly half of its expected annual net profit," a source close to the deal said on Wednesday.
Whirlpool announced on Tuesday that it had signed agreements to become the majority (51 percent) shareholder of Hefei Rongshida Sanyo Electric Co Ltd, a Hefei-based home appliances manufacturer in China's Anhui province, for USD 552 million.
"Whirlpool has a strong presence in China's higher tier segments," Jeff Fettig, CEO and Chairman of Whirlpool Corporation, said on Tuesday. "This acquisition allows the company to build on, complement, and grow its position in the emerging Chinese market and to leverage our global enterprise for greater efficiencies."
After Tuesday's transaction, a Whirlpool subsidiary will acquire all shares owned by Sanyo Electric Co Ltd and Sanyo Electric Co (China) Ltd. It will also purchase new Hefei Sanyo shares through a private placement.
"As the leading global manufacturer and marketer of major home appliances, we will leverage the technology capabilities of Hefei Sanyo and provide the investments to enhance Hefei Sanyo's research and development and product innovation capabilities," Fettig said.
This will give Chinese consumers a broader range of innovative, high-quality products through our combined trusted portfolio of brands, he added.
"Hefei Sanyo has an established nationwide distribution platform, a scaled manufacturing presence with opportunity for growth, and is ideally located in Hefei, a recognized appliance hub in China," said Mike Todman, president of Whirlpool International.
He also said Hefei Sanyo is a well-managed, profitable business with great prospects, led by an experienced and capable executive team with a track record of delivering strong performance.
A Whirlpool spokesman said the corporation's earnings and cash flow outlook for the full-year 2013 remain unchanged from the last update contained in its earnings release dated July 19.
The transaction is expected to close by the end of 2014, and Whirlpool expects that this transaction will be accretive in the first full year of integration, Kelsey said.