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Tuesday, 13 August 2013 08:31

Whirlpool to acquire majority stake in Chinese appliance maker

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BENTON HARBOR — Home appliance manufacturer Whirlpool Corp. [NYSE: WHR] announced today that its wholly-owned subsidiary, Whirlpool (China) Investment Co. Ltd., plans to become the majority shareholder in another home appliance manufacturer, Hefei Rongshida Sanyo Electric Co. Ltd. [600983: Shanghai], of Hefei, China, for approximately $552 million in cash.

Whirlpool said it plans to acquire all the shares in Hefei Sanyo that are currently owned by Sanyo Electric Co. Ltd. of Japan and its Chinese affiliate, Sanyo Electric Co. (China) Ltd. The shares amount to a 29.51 percent share of the Hefei Sanyo. Whirlpool plans to acquire additional shares through a private placement that will, in aggregate, give it a 51-percent share in the company.

In a filing with the SEC, Whirlpool said that it plans to use cash on hand or public or private debt financing to complete the transaction, depending on the timing of the close and the market conditions. As part of the agreement, Whirlpool also agreed to commit capital and technical resources to "enhance Hefei Sanyo’s research and development and product innovation."

The deal, which is subject to Chinese regulatory and Hefei Sanyo shareholder approval, is expected to close by the end of 2014. The deal should be accretive in its first full year of integration, Whirlpool said.

Hefei Sanyo has annual revenues of $636 million, EBITDA of $59 million and net earnings of $48 million for calendar year 2012. The company reported revenues of $204 million and earnings of $17 million for the first quarter of this year.

The Chinese company, founded in 1994, employs 10,000 people and makes washers, refrigerators and microwaves under the Sanyo, Rongshida/Royal Star and Diqua brands. It operates three main manufacturing sites and has a large national distribution network, according to a statement from Whirlpool.

In announcing the deal, Whirlpool affirmed its earnings and cash flow outlook for 2013. On July 19, the company said it expected free cash flow between $650 million and $700 million for the year, earnings per share of $10.05 to $10.55 and adjusted earnings per share of $9.50 to $10.00.

The outlook improved from earlier in the year based on "strong underlying trends in our business," CEO Jeff Fettig said at the time.

Whirlpool had annual sales of approximately $18.14 billion for 2012, when the company reported net earnings of $425 million, or $5.14 per share. Earnings available to Whirlpool totaled $401 million, or $5.06 per share.

The company’s stock closed at $135.06 on Monday.

Read 3364 times Last modified on Tuesday, 13 August 2013 10:25

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