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Whirlpool has entered into agreements to become a majority shareholder in Hefei Rongshida Sanyo Electric Co., a leading home appliances manufacturer based in Hefei, China.
Through this transaction, a Whirlpool subsidiary will acquire all shares currently owned by Sanyo Electric Co. and Sanyo Electric Co. (China), and purchase new Hefei Sanyo shares via a private placement.
The transaction is subject to customary conditions, certain termination rights, Chinese regulatory approval and Hefei Sanyo shareholders' approval. After the transaction is approved, Whirlpool will acquire 51% of Hefei Sanyo for approximately RMB 3.4 billion, of $552 million cash, based on the exchange rate as of August 9. The transaction is expected to close by the end of 2014, and Whirlpool expects the transaction to be accretive in the first full year of integration.
"Whirlpool has a strong presence in China's higher tier segments, 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," said Jeff Fettig, CEO and chairman of Whirlpool Corporation. "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. This will give Chinese consumers a broader range of innovative, high-quality products through our combined trusted portfolio of brands."
"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,” added 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. "
Whirlpool'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.