Whirlpool Corp. agreed to pay 758 million euros ($1 billion) for a controlling stake in Italian appliance maker Indesit Co., its largest acquisition since buying former rival Maytag Corp. eight years ago.
Whirlpool will pay 11 euros per share to Fineldo SpA and some members of Indesit’s founding Merloni family for a combined 60 percent stake, the two companies said in a statement yesterday. The shares, which would be purchased at 4.5 percent above the latest closing price, represent 67 percent of the Fabriano, Italy-based company’s voting stock.
“This will ideally position us for sustainable growth in the highly competitive and increasingly global home appliance market in Europe,” Jeff M. Fettig, chairman and chief executive officer of Whirlpool, said in the statement.
The acquisition follows Whirlpool’s deal last year to buy a majority stake in Hefei Rongshida Sanyo Electric Co. for about $552 million as the Benton Harbor, Michigan-based appliance maker expands beyond its home market. Whirlpool derived 16 percent of its sales from Europe, the Middle East and Africa last year, compared with 54 percent from North America.
The deal values Indesit at 66 percent of 2013 revenue. That compares with a median multiple of 87 percent among 21 mergers and acquisitions in the global household appliance industry in the past five years, according to data compiled by Bloomberg.
Whirlpool intends to finance its purchase of Indesit with cash on hand and debt, depending on the timing of closing and market conditions, according to the statement. The company had almost $1.7 billion in cash and near-cash items as of it most recent quarterly filing March 31, according to data compiled by Bloomberg.
The deal represents Whirlpool’s largest acquisition since completing a $2.6 billion takeover of former competitor Maytag in April 2006.
Whirlpool expects to complete the Indesit deal by the end of the year, after reviews by courts and antitrust authorities. Under the agreement with Fineldo, the price is subject to a possible pre-closing adjustment based on Indesit’s consolidated average net debt and net working capital.
Following acquisition of the stake, Whirlpool will start a mandatory tender offer on all remaining shares of Indesit in accordance with Italian law at the highest price per share paid by Whirlpool under the purchase agreements, currently expected to be 11 euros a share.
Indesit generates more than half its revenue from Western Europe. It employed 16,300 people as of June last year, while Whirlpool had a workforce of 69,000 at the end of 2013, according to data compiled by Bloomberg.
Whirlpool shares have fallen 11 percent this year. They slipped 1.4 percent in New York yesterday to close at $139.21. The Indesit deal was announced after markets closed.