SEB Shares Surge on Purchase of German Cookware Maker WMF

  • Deal values KKR’s WMF at about $1.8 billion including debt
  • France’s SEB becomes no. 1 in professional coffee machines

SEB SA surged after agreeing to buy WMF from buyout firm KKR & Co., which will make the French company the world leader in professional coffee machines and Germany’s no. 1 in cookware.

SEB shares gained 9 percent in Paris on Tuesday after announcing the deal valued at about 1.6 billion euros ($1.8 billion) including debt late Monday. The French company will pay a purchase price of 1 billion euros for WMF, which had 565 million euros of debt as of the end of 2015, and 125 million euros in pension liabilities, according to the statement.

“SEB is scaling up, particularly in Germany which is an important country for the group,” Natixis analyst Steve Levy said in a note. “The price tag is at the high end of the range, but synergies will materialize.”

The deal will give the French company a 28 percent market share in professional coffee machines globally and shore up its position in cookware, giving it a 20 percent share of the German market, as well as adding kitchen utensils and accessories, according to Natixis. Acquisitions should boost SEB’s sales to about 6.1 billion euros and operating profit to 520 million euros this year, the analyst wrote.

Tefal Pans

SEB, the maker of Tefal pans and Rowenta household appliances, agreed to buy another German company Emsa, which focuses on thermos jugs and carafes, kitchen utensils and food storage containers, for an undisclosed amount last week. Germany will become SEB’s biggest market in Europe and its second-largest in the world after China, Natixis wrote.

“The acquisition of WMF is a new structuring step in our development,” said SEB Chief Executive Officer Thierry de La Tour d’Artaise in the statement. “It allows us to significantly reinforce our positions in small domestic equipment in Germany and add very strong brands to our portfolio.”

SEB had been competing against Chinese bidders, including KingClean, as well as European companies such as Electrolux AB of Sweden, according to people familiar with the transaction. KKR first bought a stake in WMF in 2012 and eventually took the company private.

WMF was founded in Geislingen, Germany, in 1853 and makes equipment for cooking, baking, eating and drinking at home and hotels. The company, which employs about 6,000 people at more than 40 locations globally, reported an increase in sales to 1.06 billion euros in 2015, helped by growth in the U.S. and Asia.

KKR was advised by Citigroup Inc. and Deutsche Bank AG on the transaction and SEB worked with Credit Agricole SA.

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