Global private equity firm Advent International’s talks to acquire U.S. giant Whirlpool’s India unit for up to $1 billion have collapsed due to disagreements over valuation, four people familiar with the matter told Reuters.
Advent had emerged as the frontrunner to acquire a 31% stake in the company in India from its Michigan-based parent, Whirlpool Corp, which would have triggered a mandatory open offer to acquire a majority stake, the sources said.
In January, the U.S.-listed home appliance maker said it had a 51% stake in its India unit and wanted to pare that to about 20% to pay off a major chunk of its debt amid a major rejig of its global assets. At the time, it had said it could get net cash proceeds of $550 million to $600 million from the sale.
If Advent had acquired the 31% stake, it would have triggered a mandatory open offer for an additional 26% under Indian regulations, giving it a controlling 57% stake. That, the sources say, would have translated into a total deal value of $1 billion for Advent.
Advent declined to comment, while Whirlpool did not respond to Reuters queries. The sources declined to be named as the matter is confidential.
WHIRLPOOL FACES INTENSE INDIA COMPETITION
Part of the disagreement that scuttled the deal was that Advent wanted lower pricing since Whirlpool faces short-term headwinds in India, including stricter regulations on product standards and energy efficiency norms, said a source close to the negotiations.
Whirlpool parent’s “sole objective was to raise cash here to pay off debt, and the value they wanted was more,” said another person familiar with the negotiations.
Reuters could not immediately determine how much Whirlpool was asking for and what Advent’s counteroffer was.
Whirlpool has been a household name in India for decades, its “Whirlpool, Whirlpool” jingle resonating across generations. Its revenue from operations rose 16% in the financial year through March to $880.53 million, but competition from players such as LG Electronics India and Samsung Electronics has hit sales.
Advent’s interest in Whirlpool signalled a strategic push into the lucrative Indian market, complementing its existing investments in the country’s consumer durables sector, including Eureka Forbes.
Shares of Whirlpool India have dropped 47% this year.