It has been reported by the Financial Times that Whirlpool is in talks to buy a 30% stake in a Chinese maker of fridges and washing machines from Panasonic as it looks to expand its operations in Asia.
Hefei Rongshida Sanyo Electric, which is listed in Shanghai with a market value of Rmb5.3bn ($864m), would almost double Whirlpool’s share of China’s washing machine sales, though it remains some way behind market leaders Haier, Midea and Little Swan.
Whirlpool seems resolute in expanding into emerging markets, especially Asia where it made just 5% of its $18bn sales last year, which is an improvement from 3%in 2008. More than half of its sales are still in North America, but Latin America has grown to account for about a quarter.
Hefei Sanyo, which also makes fridges and microwave ovens, but with tiny share in those markets, is nearly 34% held by Hefei State-Owned Assets Holding, an investment fund of the government of Anhui province, of which Hefei is the capital city.
The local government is very supportive of an agreement, according to people familiar with the talks, in part because Whirlpool is prepared to make Hefei the centre of its north Asian operations whcih are currently based in Shanghai.
Once Whirlpool concluded a deal for Panasonic’s stake in Hefei Sanyo, it would first aim to take some or all of the local government’s stake and after then look to buy any more shares needed in the secondary market to give it complete control, according to one source.
The talks have been going on for several weeks already. After officers from Whirlpool made a number of visits to Hefei Sanyo’s facilities in April, rumours of the talks led to a sudden run-up in the Chinese company’s stock, according to one person with knowledge of the talks.
The shares lept almost 24% in a fortnight and the company asked for them to be suspended on May 13.
Panasonic in China declined to comment on the talks, saying only that an announcement would be made in time, while the Hefei State-Owned Assets Holding also declined to comment. The secretary of the chairman of Hefei Sanyo said it was a matter for the shareholders.
Whirlpool have also not offered any official comment at this time.
Panasonic, which has had well publicised financial woes of late, bought Sanyo in 2009 and has since sold a number of businesses, including selling all its non-Japan and China white-goods operations to Haier of China.
