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Electrolux in big business in Chile - acquires Chilean appliance company CTI


  

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Monday, 22 August 2011
As a part of its strategy to grow in emerging markets, Electrolux will acquire Sigdo Koppers’ controlling stake in Compa�ia Tecno Industrial S.A (CTI).

The acquisition makes Electrolux the largest supplier of appliances in Chile and Argentina, and further enhances Electrolux position as a leading appliance company in the fast-growing Latin American market.

Sigdo Koppers and certain associated parties have agreed to sell their controlling interest in CTI to Electrolux, corresponding to approximately 64% of the outstanding shares. CTI is listed on the Santiago Stock Exchange. Under the terms of the agreement, Electrolux will commence a cash tender offer to acquire 100% of the outstanding shares in CTI at a price of 34.87 Chilean Pesos (CLP) per share with Sigdo Koppers and certain associated parties committed to tender their 64% stake.
Electrolux will also commence a cash tender offer to acquire all of the outstanding shares of CTI’s subsidiary, Somela, also listed on the Santiago Stock Exchange, for CLP 325 per share, with CTI committed to tender its 78.5% stake. CTI’s net income from the sale of its shares in Somela will be distributed to its shareholders through a pre-closing dividend of CLP 4.39 per share.

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As part of the transaction, CTI will also pay a pre-closing dividend to its shareholders based on its net income for the first half of 2011, of CLP 1.63 per share. In total CTI’s shareholders will receive CLP 40.90 per share. The implied enterprise value for CTI and its subsidiaries, corresponds to approximately SEK 4.4 billion (CLP 318 billion). The tender offers are expected to commence within ten business days from the signing of the agreement yesterday.
In Chile, CTI manufactures refrigerators, stoves, washing machines and heaters, sold under the brands Fensa and Mademsa, and it is the leading manufacturer with a volume market share of 36%.Through its wholly-owned subsidiary Frimetal, it also holds a leading position in Argentina with the GAFA brand. Somela is the largest supplier of small domestic appliances in Chile.
In 2010, CTI generated consolidated sales of CLP 203 billion (approximately SEK 2.9 billion) and an operating income (EBIT) of CLP 32 billion (approximately SEK 450 million), corresponding to a margin of 16% and a net profit of CLP 23 billion (approximately SEK 330 million). CTI has 1,200 employees and two manufacturing sites in Chile and one site in Argentina.
“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. Together we will generate significant revenue synergies and cost synergies relating to purchasing and production,” says Keith McLoughlin, President and CEO of Electrolux. “Latin America is important to our growth plans and we believe there will be a successful path ahead for the combined forces of Electrolux and CTI.”  
“Electrolux has very strong roots in Latin America, and we have been partners with CTI in certain Latin American markets for the past 15 years. We are committed to the strong brands of CTI, which are aimed at segments of the market that are complementary to those of Electrolux,” says Ruy Hirschheimer, President of Electrolux Major Appliances Latin America.
Based on a press release


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