NEW YORK (The Deal) -- Appliances maker Whirlpool (WHR) late on Thursday said it would buy a 60.4% stake in Italian peer Indesit Co. SpA from conglomerate Fineldo SpA and the Merloni family for 758 million euros ($1.03 billion).
The stake represents 66.8% of the voting rights, given that some Indesit shares are treasury stock. Whirlpool expects to pay 11 euros per share, and to follow the purchase up with a mandatory offer to minority shareholders at the highest price it pays for the initial holding. The price is a scant 4.5% premium to Indesit's Thursday closing price.
The deal follows a long period of painful restructuring at Indesit where job cuts have involved extended discussions with the Italian state and provoked strikes. Fineldo put its Indesit stake up for review in around November, hiring Goldman, Sachs & Co. to assess options. Fineldo CEO Gian Oddone said the deal will provide Indesit "with the tools to build a solid and sustainable future."
For Whirlpool the agreement comes almost a year after the Benton Harbor, Mich., appliance maker arranged to take a 51% stake in Chinese counterpart Hefei Rongshida Sanyo Electric Co. Ltd. for 3.4 billion renminbi ($547.8 million) in cash in a transaction structured as a joint venture. That deal is expected to close by the end of 2014."We expect this opportunity to position our European business for growth and ongoing value creation with a well-respected and established company such as Indesit," said Whirlpool Chairman and CEO Jeff M. Fettig in a statement. "We consider acquisitions based on strategic fit, shareholder value and a high degree of confidence in our ability to execute. We believe this will ideally position us for sustainable growth in the highly competitive and increasingly global home appliance market in Europe." Under the deal Fineldo and the Merloni selling shareholders aren't allowed to solicit alternative offers until July 31, 2015, or unless an Italian court doesn't clear the transaction by year-end. The selling shareholders must pay a breakup fee of 40 million euros if they breach their exclusivity obligations. Turkey's Arcelik AS was reportedly a late-stage bidder for Indesit and was said to have taken advice from Bank of America Merrill Lynch. Whirpool had revenue of $19 billion in 2013 and had a market value as of Thursday's close of $10.8 billion. Indesit had 2013 revenue of 2.67 billion euros, down 4.6%, while Ebit, at 68 million euros, tumbled 49%. First-quarter sales continued to decline, with Indesit blaming lower Russian revenue and a fall in the value of the ruble and other currencies. Activist investor Amber Capital in May called on the company to sell itself. The 11 euro-per-share price Whirlpool will pay for Indesit will be adjusted for net debt and net working capital. Whirpool plans to use debt financing as well as cash on hand to fund the purchase. The Benton Harbor, Mich.-based company didn't name its advisers but local reports have said it is using UBS. Messages were sent seeking further comment to Whirlpool and to Fineldo representatives. Indesit declined to comment and the banks involved didn't immediately respond to requests for comments.
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