Arcelik Agrees to Acquire Appliance Maker Defy For $327 Million, CEO Says
Arcelik AS (ARCLK), Europe’s third-largest home appliances maker, agreed to buy South African appliance maker Defy Appliances (Pty) Ltd. for $327 million.
The price includes $229 million of equity value and about $98 million of a shareholder loan provided by Franke Holding AG, a Swiss home appliance maker that owns Defy, Arcelik said in a filing with the Istanbul Stock Exchange today. Defy Appliances has an enterprise value of 2.24 billion South African rand ($324 million), it said. The agreement for the purchase was signed yesterday, Arcelik said.
“The proposed acquisition will crystallize the opportunity for Arcelik to expand in South Africa and sub-Saharan Africa using Defy as a platform,” Levent Cakiroglu, chief executive officer of the Istanbul-based company, said in an e-mailed statement.
The final transaction price will be determined at the date of closing, expected at the end of September after approvals from South African and Namibian antitrust authorities, Arcelik said.
“Within its growth strategy in emerging markets, the acquisition of the market leader in the appliance market of the South African region is positive,” Tunc Yildirim, an analyst at Istanbul-based Standard Unlu, said in an e-mailed note. Standard Unlu has an “outperform” rating on Arcelik stock.
Arcelik fell 24 kurus, or 3 percent, to 7.7 liras at 12:29 p.m. on the Istanbul Stock Exchange. The 100-stock ISE National 100 Index, which includes Arcelik, was 3.2 percent lower at 59,657.96 in Istanbul after Fitch Ratings said Turkey’s current- account deficit and the pace of bank lending growth are causing “uncertainty” on its outlook for an upgrade.
‘Growth Potential’
“Considering the growth potential in the South African region and the acquired company’s strong margins, we believe that this acquisition price is fair or even might be a bargain,” Yildirim said. The price meant a valuation of 7.6 times Defy’s earnings before interest, taxes, depreciation and amortization, or Ebitda, he said.
Defy, which makes refrigerators, freezers, dryers, ovens and cooking appliances in three plants in South Africa, had Ebitda of $43 million in 2010, on sales of $345 million, according to Arcelik.
Arcelik, which had 6.9 billion liras ($4.2 billion) of sales in 2010, aims to grow its lira-based sales between 12 and 16 percent, the company said April 26. Arcelik, whose brands include Beko, Grundig and Blomberg, has 11 production plants in Turkey, Romania, China and Russia, according to the company.
To contact the reporter on this story: Ercan Ersoy in Istanbul eersoy@bloomberg.net.
To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.
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