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Whirlpool acquires majority stake in Chinese manufacturer for $552M
Benton Harbor-based Whirlpool Corp. is looking to stir up a tidal wave of profits in China.
Whirlpool (NYSE: WHR), a global manufacturer of home appliances, announced today that it has entered into agreements to become a majority shareholder, 51 percent, in Hefei Rongshida Sanyo Electric Co. Ltd., or Hefei Sanyo, a home-appliances manufacturer based in Hefei, China.
A Whirlpool Corporation subsidiary will acquire all shares currently owned by Sanyo Electric Co. Ltd. and Sanyo Electric Co. (China) Ltd., and purchase new Hefei Sanyo shares via a private placement.
The transaction, which Whirlpools expects to close by the end of 2014, is subject to customary conditions, certain termination rights, Chinese regulatory approval, and Hefei Sanyo shareholders' approval.
After the transaction is approved, Whirlpool will acquire a majority stake in Hefei Sanyo for approximately $552 million cash, based on the exchange rate as of Aug. 9, 2013.
Whirlpool expects the acquisition will be accretive in the first full year of integration.
Chinese appliance market
The acquisition allows Whirlpool to build on, complement and grow its position in the emerging Chinese market and “leverage our global enterprise for greater efficiencies,” said Jeff Fettig, CEO and Chairman of Whirlpool.
"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."
Hefei Sanyo operates 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.
“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,” he added.
$48M in earnings
Hefei Sanyo was founded in 1994 and employs about 10,000 people, marketing brands that include Sanyo, Rongshida/Royal Star and Diqua.
In 2012 the Hefei Sanyo reported a revenue of $636 million and net earnings of $48 million.