Arcelik Buys SA Defy Appliances

Blomberg and others report that Arcelik (Beko), who is now Europe’s third-largest home appliances maker, has agreed to buy South African appliance maker Defy Appliances for $327 million.

In the UK Arcelik trades under the Beko brand name primarily but also Leisure and Blomberg.

The price includes $229 million of equity value and about $98 million of a shareholder loan provided by Franke Holding AG, a Swiss home appliance maker that owns Defy, Arcelik said in a filing with the Istanbul Stock Exchange today. Defy Appliances has an enterprise value of 2.24 billion South African rand ($324 million), it said. Arcelik said the agreement for the purchase was signed yesterday.

“The proposed acquisition will crystallize the opportunity for Arcelik to expand in South Africa and sub-Saharan Africa using Defy as a platform,” Levent Cakiroglu, chief executive officer of the Istanbul-based company, said in a statement.

The final transaction price will be determined at the date of closing, expected at the end of September after approvals from South African and Namibian antitrust authorities, Arcelik said.

“Considering the growth potential in the South African region and the acquired company’s strong margins, we believe that this acquisition price is fair or even might be a bargain,” Yildirim said. The price meant a valuation of 7.6 times Defy’s earnings before interest, taxes, depreciation and amortization, or Ebitda, he said.

Defy, which makes refrigerators, freezers, dryers, ovens and cooking appliances in three plants in South Africa, had Ebitda of $43 million in 2010, on sales of $345 million, according to Arcelik. It also looks to us as if Defy have been buying in badged machines from the Beko stable.

Arcelik, which had $4.2 billion of sales in 2010, aims to grow its lira-based sales between 12 and 16 percent, the company said April 26. Arcelik, whose brands include Beko, Grundig and Blomberg, has 11 production plants in Turkey, Romania, China and Russia, according to the company.