This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Whirlpool Deal for Indesit Psyching Out Haier, Chinese Appliance Makers

Stocks in this article: WHR HRELF

BEIJING (TheStreet) -- A debt-warning flag was hoisted this week after Whirlpool (WHR) won control of a smaller, European appliance maker called Indesit. But Whirlpool did not account for the deal's psychological impact on the Chinese competition.

Whirlpool's victory troubled Fitch Ratings but psyched out the American appliance maker's Chinese rivals, some of which -- like Haier (HRELF) -- are currently downsizing and struggling to compete in western consumer markets.

When Whirlpool won control of Italy's Indesit with a nearly $1 billion bid, worth just over $15 a share, it dealt a blow to appliance manufacturer confidence in China at a critical time for the sector. And that alone could prove well worth the debt attached to the deal that Fitch warned could lower Whirlpool's credit rating.

Microsoft Announces Massive Layoff, Cutting 18,000 Workers

Cliffs Natural Resources Breaks Activist's Way After ISS, Glass Lewis Support

40% Would Quit Their Jobs for Better Health Care

Google's Future Continues to Depend on Mobile Ads

The American company beat what Chinese media said was a $12-a-share offer from TV-appliance conglomerate Changhong on behalf of its refrigerator division Meiling. A business newspaper complained that Whirlpool had "snatched a meal" from China's mouth.

Changhong is a Mao Zedong-era state company that's been making televisions since 1958. To supplement domestic sales and global exports, it's expanded into Europe in recent years by buying a compressor company in Spain and building a TV factory in the Czech Repiublic.

An Indesit buyout would have added a feather to Changhong's cap by giving the Meiling unit its first foothold in Europe. The National Business Daily newspaper quoted "inside sources" as saying the company's domestic refrigerator business has grown "dull and mediocre," prompting Changhong's Indesit bid and a push to expand abroad.

China's largest appliance maker, Haier, which goes head-to-head with Whirlpool in the U.S., is also losing its shine. At a conference last month, Haier CEO Zhang Ruimin said the company was undergoing a "transition" that would require laying off about 10,000 of its 55,000 employees by the end of 2014. Most cuts were to be in mid-level management. Several thousand were laid off last year, too.

State media quoted Zhang as saying that Haier is "walking on thin ice."

In another sign of the transition under way for Chinese appliance companies, Midea last month bought 20% of smaller rival Little Swan. And since last fall, appliance maker Gree has been rattled by a recall of 2.5 million dehumidifiers sold in the U.S.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs