Arçelik AŞ, a Turkish multinational household appliances manufacturer, and Hitachi Global Life Solutions (Hitachi GLS) have signed a share purchase agreement to establish a new joint venture company.
As part of the transaction, Hitachi GLS will establish a new company into which it will transfer its global home appliances business outside of Japan. Arçelik will acquire 60% ownership in the new company, which both partners aim to establish in the spring of 2021, subject to regulatory approvals and satisfaction of other customary conditions, said a statement.
The transaction value is calculated as $300 million on a cash-free and debt-free basis for 60% of the business, which is subject to customary adjustments based on the balance of net debt, net working capital of the company, and minority shares adjustment for the outstanding minority shares as of the closing date.
Arçelik and Hitachi GLS plan to build a competitive value chain leveraging the complementarity of both companies’ strategies and create growth opportunities that will increase their access to new markets, enhance their product ranges and sales capabilities, while delivering increased competitiveness across supply chain and production operations.
Arçelik has consistently expanded its home appliance business in over 145 countries around the world. The company has grown significantly in Europe in particular and achieved strong growth in South Asia over the last decade. Hitachi GLS currently operates its home appliance business mainly in Southeast Asia and the Middle East, where it enjoys a high-end brand image. The joint venture will manufacture, sell and provide after-sales services of Hitachi branded home appliances (including refrigerators, washing machines, vacuum cleaners etc.) globally outside of the Japanese market. Both partners will benefit from their complementarity in geographic coverage of sales channels and product line-ups as well as from management synergies arising from their collaboration.
The joint venture encompasses 12 Hitachi GLS group companies outside Japan (two manufacturing companies, ten sales companies) and approximately 3,800 employees. The portfolio generates a revenue of over JPY100 billion in sales (approximately $1bn). Leveraging the sales network of Arçelik and Hitachi GLS, the joint venture will expand the sales of Hitachi branded products in Europe, South Asia and Africa as well as South East Asia and the Middle East.
In addition, Arçelik and Hitachi GLS will combine their expertise in other key areas such as R&D, procurement and production systems, in order to optimize the joint venture’s global supply chain and strengthen its competitive positioning in the market.
Sustainability is at the core of both Arçelik’s and Hitachi’s strategies. Through their combined leadership in energy efficiency and sustainable solutions related to the home, the partnership will increase competitiveness around these key issues in the broader market, it said. – Tradearabia