Haier Smart Home Intends to Acquire Electrolux South Africa's Water Heater Business

Rhea-AI Summary

Haier Smart Home (HSHCY) has entered into an agreement to acquire Electrolux South Africa's water heater business for ZAR 2.45bn (approx. RMB 980m). The acquisition includes the century-old Kwikot brand, a leading water heater manufacturer in South Africa with a double-digit EBITDA margin. This strategic move aims to expand Haier's presence in the African market, leveraging Kwikot's established distribution channels and service network.

The deal is expected to create synergies in product and supply chain management, allowing Haier to expand Kwikot's product lineup and explore opportunities in solar water heaters and water purifiers. Additionally, Haier plans to accelerate its refrigerator and laundry businesses in the region. The transaction, subject to regulatory approvals, is anticipated to close in Q4 2024.

Positive

• Acquisition of leading South African water heater brand Kwikot for ZAR 2.45bn
• Kwikot has a double-digit EBITDA margin, indicating strong profitability
• Expansion into Africa's second-largest economy with a population of 61.4 million
• Synergies expected in product and supply chain management
• Opportunity to leverage Kwikot's distribution channels for Haier's other product lines
• Haier's revenue in Middle East and African markets has doubled annually for the past three years

Negative

• Large acquisition cost of ZAR 2.45bn (approx. RMB 980m) may impact short-term financials
• Integration challenges and costs associated with merging operations
• Regulatory approval process could delay completion until Q4 2024

QINGDAO, China, July 18, 2024 /PRNewswire/ -- On 18^th July 2024, Haier Smart Home entered into the transaction with Electrolux Group in Sweden to acquire 100% equity interest in Electrolux South Africa Proprietary Limited ("ESA"), its subsidiary engaging in water heater business in South Africa, for an enterprise value of ZAR 2.45bn (approx. RMB 980m).

South Africa is the second largest economy in Africa with a population of 61.4 million. ESA owns the century-old water heater brand Kwikot that specializes in diversified products and solutions of electric water heaters, solar water heaters, multi-energy solutions, gas water heaters and heat pumps. It is the leading water heater manufacturer in South Africa, with a double-digit EBITDA margin. Kwikot operates well-established distribution channels, installation network and after-sales service system to provide users with speedy response and quality services.

The acquisition is an important step in the strategic implementation of Haier Smart Home's development in African market. 

Leveraging Kwikot's extensive HVAC channel and service coverage, Haier Smart Home will realize synergies in product and supply chain management to expand Kwikot's water heater lineups and unlock potentials in solar water heaters and water purifiers. In addition, Haier Smart Home will also accelerate its refrigerators and laundry businesses with the help of Kwikot's strong local distribution channels.

The acquisition is not only significant to Haier Smart Home's Middle East & Africa strategy, it is also integral to its global brand portfolio. In May this year, Haier Egypt Eco Park was officially opened. It covers an area of 200,000 square meters with annual production capacity exceeding 1.5 million units of air conditioners, washing machines, televisions, refrigerators and freezers. Haier Smart Home has been able to double its revenue every year for the past three years in Middle East and African markets where its freezers ranked number one in Nigeria, high-end air conditioners revenue grew 122% cumulatively in Egypt and high-end washing machines grew 30% in Ghana.

The transaction is subject to regulatory approvals and is expected to complete in the fourth quarter of 2024. The financial adviser is ING Bank and the legal counsel is DLA Piper.

【About Haier Smart Home】

Founded in 1984, Haier Smart Home, one of the subsidiaries of Haier Group, is a leading global provider of solutions for a better and smarter life, and is the world's largest home appliance manufacturer.

The Company listed its A shares on the Shanghai Stock Exchange in 1993, listed its D shares on the China Europe International Exchange in Frankfurt, Germany in 2018, and listed its H shares on the Hong Kong Stock Exchange in 2020, realizing the "A+D+H" global capital market layout. Haier Smart Home has 100,000+ employees globally, including more than 1/3 foreign employees.

Haier Smart Home has built up seven world-class premium home appliance brand clusters globally, including Haier, Casarte, Leader, GE Appliances of the United States, Fisher&Paykel of New Zealand, AQUA of Japan, and Candy of Italy, and created the world's first scenario brand, SANYINIAO, which defines the most suitable smart home solutions for users; meanwhile, the Company is exploring the eco-brand of smart life, which defines unlimited links with users and perpetual service.

View original content:https://www.prnewswire.com/news-releases/haier-smart-home-intends-to-acquire-electrolux-south-africas-water-heater-business-302200509.html

SOURCE Haier Smart Home

FAQ

What is the value of Haier Smart Home's acquisition of Electrolux South Africa's water heater business?

Haier Smart Home is acquiring Electrolux South Africa's water heater business for an enterprise value of ZAR 2.45 billion (approximately RMB 980 million).

When is the Haier Smart Home (HSHCY) acquisition of Kwikot expected to be completed?

The acquisition is expected to be completed in the fourth quarter of 2024, subject to regulatory approvals.

What are the main benefits for Haier Smart Home (HSHCY) in acquiring Kwikot?

The acquisition provides Haier with a leading position in South Africa's water heater market, access to established distribution channels, and opportunities for synergies in product and supply chain management.

How has Haier Smart Home's (HSHCY) performance been in the Middle East and African markets recently?

Haier Smart Home has been able to double its revenue every year for the past three years in Middle East and African markets, with strong growth in various product categories.