Electrolux buys Chilean rival

City A.M. Reporter
WORLD number two home appliances maker Electrolux, looking to further boost its presence in emerging countries and offset weakness in mature markets, has agreed to buy market-leading Chilean appliance company CTI.

Sweden’s Electrolux has been battered by fears of a return to recession in North America and worries about the impact of the debt crisis in Europe.

Its share price has sunk since weak second-quarter results last month.

Electrolux said the enterprise value for the deal, which comes after the recent purchase of Egyptian appliance maker Olympic Group, was 4.4bn crowns (£420m).

“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,” chief executive Keith McLoughlin said in a statement.

“The company is not growing its earnings at a dramatic pace by these acquisitions, but price tags seem reasonable and the strategic importance should not be underestimated,” Danske Markets said in a note.

Electrolux said CTI makes fridges, stoves, washing machines and heaters and has 36 per cent of the Chilean market. It also holds a leading position in the Argentinian market.

Analysts noted that Electrolux was putting its cash to work via acquisitions rather than keeping money in the bank.

“We believe that post this acquisition, the group’s room to do further deals will be limited,” said Unicredit in a research note.

Electrolux had been in talks for bankrupt South Korean group Daewoo, but has stopped those negotiations.