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.
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.