BENTON HARBOR — Appliance maker Whirlpool Corp. is selling off its operations in Russia.
The company’s Whirlpool EMEA SpA subsidiary inked a share purchase agreement to divest the operations to Arçelik A.Ş., a maker of household appliances and durable goods based in Istanbul, Turkey, according to a filing with federal securities regulators.
Under the deal, Whirlpool will sell its Russian operations to Arçelik for deferred payments that it expects the buyer to make over a 10-year period. The payments will be capped at the net asset value of the business at closing, which Whirlpool estimates at around 220 million euros, or about $232 million.
Whirlpool (NYSE: WHR) expects the deal, which is subject to regulatory approval and other conditions, to close in the third quarter of this year.
“The Company, as a U.S. company, is taking this action given the current operating environment in Russia and has concluded the agreement to be the best course of action for its employees, shareholders and overall business,” the company said in the securities filing.
The sale will include a manufacturing plant in Lipetsk, Russia, and a sales organization in Moscow, as well as sales operations in Kazakhstan and other nations in the Commonwealth of Independent States.
After the close of the deal, Arçelik will continue to make Whirlpool brands Indesit, Hotpoint and Stinol at the Lipetsk facility, according to the filing.
The move comes after Whirlpool announced in March that it was limiting production in Russia to “provide goods for families who need our appliances to clean, cook and provide proper food and medicine storage in their homes.”
In April, the company said it had launched a “strategic review of our EMEA business.” In a conference call with brokerage analysts to discuss first quarter results, Whirlpool CEO Marc Bitzer noted that “Russia has been a good and important market for Europe, but that’s not the reason why we look at the strategic review.” Bitzer said the scale-back was “basically keeping the lights on in our Russia factory,” while acknowledging that the move was “probably not sustainable over time.”
“(Whirlpool), like many other companies will, of course, carefully consider what strategically is possible or not possible in Russia going forward,” Bitzer said in the call.
With the planned divestiture, Whirlpool joins a growing number of global companies that have planned to exit from Russia or halt operations following the country’s invasion and ongoing war in Ukraine. And, like other companies exiting Russia, Whirlpool said the divestiture will result in a loss. Whirlpool estimates that with the transaction, it will record a loss of $300 million to $400 million in the present second quarter of 2022, with the final amount subject to changes in working capital, divestiture-related costs and foreign currency fluctuations.
Locally, Ada-based direct-selling giant Amway Corp. announced in March that it was suspending operations in Russia. In a statement at the time, the company said “the continuing war, along with the global legal and operational environment, makes it impossible to continue business as we have been in Russia.”
As well, Battle Creek-based Kellogg Co. (NYSE: K) stopped all investments and shipments into Russia, but maintains a manufacturing plant to make “staple foods” for the local market, according to a report in the trade publication Just Food.
However, Kalamazoo-based Stryker Corp. (NYSE: SYK) is continuing its sales and exports into Russia, earning it a Grade F from the Yale Chief Executive Leadership Institute, which maintains a list of corporate responses to the Russian invasion.