Whirlpool Corporation made a significant announcement on November 30, 2023, revealing its intention to divest up to 24 percent of its ownership stake in Whirlpool of India Ltd. This strategic move is part of Whirlpool Corp’s proactive measures to alleviate debt burdens and strengthen its financial position in the market.
Whirlpool Mauritius Ltd, a promoter entity of Whirlpool of India, is set to execute a strategic move by selling up to 24 percent of the local unit through a block deal, valued at a substantial $451 million, as confirmed by various industry executives familiar with the deal terms.
Currently holding a 75 percent ownership stake in the home appliance maker, the promoter group has previously signaled its intention to decrease its stake in the company to address debt concerns.
On November 30, 2023, Whirlpool Corp announced its plan to divest up to 24 percent of its ownership interest in Whirlpool of India Ltd to alleviate debt pressures.
Detailing the specifics of the deal, one source revealed, “The base size of the deal is $282 million, representing 15 percent of outstanding share capital, with an upsize option of up to $169 million, equivalent to 9 percent of outstanding share capital.”
Another source disclosed to Moneycontrol that the proposed block deal’s floor price stands at Rs 1,230 per share, marking a 7.6 percent discount compared to the last trading price of Rs 1,331.20.
According to a third undisclosed source speaking to Moneycontrol, Goldman Sachs is reportedly serving as the advisor for the aforementioned deal involving Whirlpool Mauritius Ltd and Whirlpool of India.
All three individuals providing information for this report opted to remain anonymous.
Upon reaching out for comment, both Whirlpool and Goldman Sachs have yet to respond to email inquiries. Moneycontrol will continue to monitor this situation and update the article accordingly pending any responses from the involved parties.
Furthermore, Moneycontrol has had the opportunity to review the termsheet of the proposed block deal, providing additional insight into the transaction.
The Whirlpool Corp India strategy
In a regulatory disclosure made by Whirlpool Corp in November, it was stated that the parent company intends to maintain a majority interest in Whirlpool of India following the completion of the planned stake sale. The disclosure outlined the company’s intention to utilize the proceeds from the transaction to reduce debt levels, thereby enhancing balance sheet flexibility.
Furthermore, the disclosure specified that the anticipated transaction proceeds for debt repayment are in addition to the $500 million term loan repayment previously disclosed by the company, expected to occur in the fourth quarter of 2023.
Highlighting its commitment to the Indian market, the disclosure emphasized Whirlpool’s view of India as a significant marketplace for growth, integral to the company’s overall growth strategy. Whirlpool expressed its dedication to expanding its business in India through initiatives such as new product launches and the recent acquisition of Elica India business.
Importantly, Whirlpool clarified that this announcement is not expected to impact previously issued full-year guidance, signaling the company’s confidence in its ability to navigate through this strategic transaction while maintaining its operational outlook.