Whirlpool partners Arcelik in Europe, quits MidEast and Africa (updated)

Applied Energetics

17/01/2023 11:17

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      Turkey's Arcelik will own 75% of new Europe-focused entity
    

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      Whirlpool will retain a 25% stake
    

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      Arcelik shares rise as much as 9%
    

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      Sale part of plan to focus on higher margin businesses
    

  
 (Adds shares, comment from Arcelik)
       Jan 17 (Reuters) - U.S. home appliances maker Whirlpool
 WHR.N  is folding its European business into a new company
controlled by Turkish rival Arcelik  ARCLK.IS , reducing its
exposure to a market where it had warned attractive profit
margins could be some way off.
    Whirlpool also said it had agreed to sell its Middle Eastern
and African businesses to Arcelik, which the Turkish firm said
was for 20 million euros ($21.65 million) in cash. 
    The moves come after Whirlpool launched a review of its
Europe, Middle East and Africa (EMEA) operations in April 2022
and said it planned to focus on higher margin businesses.
    Global firms have been cutting their European operations due
to sluggish growth and high energy costs. Turkish exporters,
meanwhile, have gained a competitive edge from a plunge in the
country's lira currency to record lows, making goods produced in
Turkey cheaper to overseas buyers.
    "This allows us to participate in significant value creation
from the repositioning of the business and cost synergies
through our minority interest," said Whirlpool Chief Executive
Officer Marc Bitzer.
    The new firm will include Arcelik's European units such as
major domestic appliances, small domestic appliances and
consumer electronics. Whirlpool will own 25% and Arcelik will
own 75%, the U.S.-based company said on Tuesday.
    Arcelik's shares were up 5.1% at 1055 GMT, after rising as
much as 9.4% following the announcement.
    "This new business will increase the competitiveness of Koc
Group and Arcelik and create great value for both our country
and our stakeholders", said Levent Cakıroglu, chief executive of
Turkish conglomerate Koc Holding, which owns Arcelik.
    The combined entity is expected to have annual sales of 6
billion euros and is likely to have more than 20,000 employees
across multiple European countries.
    Whirlpool will retain ownership of its EMEA KitchenAid unit,
it said.
    The U.S. firm said the Middle Eastern and African businesses
being sold to Arcelik had sales of around $4.2 billion in 2021.
The entirety of Whirlpool's EMEA business reported sales of
$5.01 billion last year.
    The transactions will negatively impact Whirlpool's full
year earnings per share by $26 to $28 on a GAAP accounting
basis, the company said, adding it took a writedown of about
$1.5 billion on its EMEA business in fourth quarter.
    The deals are expected to be completed in the second half of
the 2023, subject to regulatory approval, Arcelik said.
    ($1 = 0.9239 euros)
 (Reporting by Akanksha Khushi and Shubham Kalia in Bengaluru
and Canan Sevgili and Berna Suleymanoglu in Gdansk; Editing by
Matt Scuffham, Rashmi Aich and Mark Potter)
 ((Akanksha.Khushi@thomsonreuters.com;))