Electrolux plans to acquire Sigdo Koppers' controlling stake in Compañia Tecno Industrial S.A (CTI), which would make Electrolux the largest appliance OEM in Chile and Argentina and enhance its in the growing Latin American appliance market.
Sigdo Koppers and other parties have agreed to sell their controlling interest – about 64% of outstanding CTI shares - to Electrolux. CTI is listed on the Santiago Stock Exchange. The agreement calls for Electrolux will commence a cash tender offer to acquire 100% of the outstanding shares in CTI at a price of 34.87 Chilean Pesos (CLP) per share.
Electrolux will offer to acquire all the shares of CTI subsidiary Somela, which is also on the Santiago Stock Exchange, for CLP 325 per share, with CTI committed to tender its 78.5% stake.
The agreement's implied enterprise value for CTI and its subsidiaries, corresponds to approximately SEK 4.4 billion (CLP 318 billion or approx. US$700 million).
In Chile, CTI manufactures refrigerators, stoves, washing machines and heaters, sold under the brands Fensa and Mademsa. CTI is Chile's leading manufacturer with a volume market share of 36%. Through its wholly owned subsidiary Frimetal, CTI also holds a leading position in Argentina with the GAFA brand. Somela is the largest supplier of small domestic appliances in Chile.
In 2010, CTI generated consolidated sales of CLP 203 billion (approximately SEK 2.9 billion) and an operating income (EBIT) of CLP 32 billion (approximately SEK 450 million), corresponding to a margin of 16% and a net profit of CLP 23 billion (approximately SEK 330 million). CTI has 1,200 employees and two manufacturing sites in Chile and one site in Argentina.
"This acquisition builds on the strengths of Electrolux and CTI and provides significant growth opportunities that would be difficult to achieve by either company individually. Together we will generate significant revenue synergies and cost synergies relating to purchasing and production," says Keith McLoughlin, President and CEO of Electrolux. "Latin America is important to our growth plans and we believe there will be a successful path ahead for the combined forces of Electrolux and CTI."
"Electrolux has very strong roots in Latin America, and we have been partners with CTI in certain Latin American markets for the past 15 years. We are committed to the strong brands of CTI, which are aimed at segments of the market that are complementary to those of Electrolux," says Ruy Hirschheimer, President of Electrolux Major Appliances Latin America.
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