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August 13, 2013 2:02 pm
Whirlpool of the US has agreed on a $552m proposal to take control of a Chinese maker of fridges and washing machines as it tries to gain a better foothold in the fast-growing consumer markets of Asia.
The agreement, which was revealed by the FT in May, will see the US group buy out a stake in Hefei Sanyo that is owned by Panasonic of Japan and simultaneously inject more than $330m of cash for new shares.
The growth in sales of white goods in China has been increasing at more than 10 per cent a year for the past decade, according to industry estimates, although sales have been supported by government subsidies, especially among rural households.
Whirlpool is determined to expand in emerging markets, especially Asia where it made just 5 per cent of its $18bn sales last year, up from 3 per cent in 2008. More than half of its sales are still in North America, but Latin America has grown to account for about a quarter.
“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,” said Jeff Fettig, chief executive of Michigan-based Whirlpool.
Hefei Sanyo, which was started as a joint venture between Sanyo and the local government in 1994, is currently 33.5 per cent owned by the local government in the province of Anhui, whose capital is Hefei. Panasonic owns 29.5 per cent and the remainder is held by private shareholders through the company’s listing on the Shanghai stock market.
With the new shares being sold to Whirpool as part of the agreement to give it 51 per cent of the enlarged capital base, public shareholders will be diluted to a stake of 25.8 per cent of Hefei Sanyo and the local government’s stake will fall to 23.5 per cent.
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