Electrolux today signed a preliminary agreement with Paradise Capital to acquire 52% of Olympic Group, a Cairo-based appliance manufacturer. Electrolux said the acquisition is in-line with its strategy to grow in emerging markets.
Electrolux, based in Sweden, described Financial Investments S.A.E. Olympic Group as the largest manufacturer of household appliances in the Middle East and North Africa region. The Egyptian OEM has 7300 employees and manufactures washing machines, refrigerators, cooking appliances, and water heaters.
In 2009, Olympic Group had sales of 2.1 billion Egyptian pounds (approx. US$368 million) and an estimated volume market share of approximately 30% in Egypt. It dominates the water heater market in Egypt, with an estimated 70% share of the market, and leads the water heater markets in Libya and Jordan.
Electrolux and Olympic Group have had a successful commercial partnership in the region for almost 30 years, which today covers technology, supply of components, distribution, and brand licensing.
Olympic Group sells appliances under the Olympic Electric, Ideal, and Ideal Zanussi, brand names. It is also the sole licensee of the Electrolux, Frigidaire, and Iberna brand names in Egypt. Zanussi, Electrolux, and Frigidaire are brands owned by Electrolux; Iberna is a brand owned by Italy-based appliance OEM Candy Hoover Group Srl.
The agreement signed is a Memorandum of Understanding with Paradise Capital for Electrolux to acquire Paradise Capital’s 52% controlling interest in Olympic Group and pay a price of approximately EGP 45.30 per share. The acquisition and pricing are subject to completion of due diligence and agreement with Paradise Capital on customary transaction documentation. In connection with an acquisition of Paradise Capital’s 52% controlling interest, Electrolux intends to launch a Mandatory Tender Offer for up to 100% of the shares in Olympic Group, in line with Egyptian capital market regulations, and for the same purchase price as agreed with Paradise Capital.
Upon completion of a transaction, Paradise Capital will acquire Olympic Group’s ownership interest in Namaa and B-Tech, both listed on the Egyptian Stock Exchange. The preliminary price is EGP 13.88 per share for Namaa and EGP 3.44 per share for B-Tech. Excluding these two non-core assets, the enterprise value for 100% of Olympic Group will be an estimated EGP 2.7 billion. Upon completion of a transaction Olympic Group will enter into a management agreement with Electrolux and Paradise Capital. Against a management fee Electrolux and Paradise Capital will ensure continued technical and management support to Olympic Group, at terms to be agreed upon in detail at a later stage.
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