Reliance & Havells enter PE party to snap up Whirlpool

Time of India

5 hours ago

Reliance Retail
and the home-grown
consumer appliances
major
Havells India
would compete with several bulge-bracket buyout funds, multiple people told ET, to acquire a controlling interest in
Whirlpool of India
, the locally listed arm of the Michigan-based company that was once the world's largest appliance maker by sales.
These two companies are competing with financial sponsors
EQT
and
Bain Capital
, who have also been shortlisted after the initial round of screening.
TPG Capital
is also among those initiating the due diligence, said the people mentioned above.
Whirlpool Corp
is looking to sell 31% stake in
Whirlpool of India
, which generates 85% of its Asia revenue, while retaining a 20% equity stake in the company. The equity in India is held through Whirlpool Mauritius Ltd.
The monetisation exercise is part of a global reorganisation initiated at the end of 2022 when the company, synonymous in the US with its namesake brand as well as KitchenAid and Maytag products, posted a $1.5 billion loss.
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It has already reshaped its global portfolio pruning operations in key Asian markets and in pockets of Europe. Whirlpool Corp has also heightened efforts to cut costs and its workforce.
The company is simultaneously focusing on selling smaller home appliances like blenders and coffee makers — to overhaul its more than century-old business — as consumers pull back on large purchases. The company said it is keen to raise net cash proceeds of $550-600 million (Rs 4,684-5,110 crore) from the transaction. A formal stake-sale process was launched in April by the company's advisor Goldman Sachs.
The change of control transaction will also trigger an open offer for an additional 26% stake from public shareholders of the company. If fully subscribed to, the incoming investor could end up owning 57% of the company. Public shareholders own 49% of the company.
ET in its edition dated April 29 had reported PE funds like Bain, Carlyle, KKR among others were evaluating the opportunity. The high valuations have seen some interest taper, added people in the know.
Open Market Deal
Last February, the parent sold a 24.7% stake in its Indian arm through block deals worth Rs 4,039 crore. The buyers had included five mutual funds such as SBI Mutual Fund and Aditya Birla Sunlife Mutual Fund, and one foreign institutional investor--Societe Generale.
After the parent announced the decision to reduce its holding to a minority stake on January 30, the stock price in India fell to a 52-week low of Rs 899 on March 3 from the highs of Rs 1,577 on January 29. It closed at Rs 1,329/a piece on Thursday, down almost 3% from previous day's closing with a market capitalisation of Rs 16,861 crore. At current value, a 57% stake would translate to a Rs 9,610 crore ($1.13 billion) acquisition.
Emails sent to Whirlpool Corp, Reliance Retail and
Havells
remained unanswered until the publication of this report.
TPG, Bain, EQT declined to comment.
Hot & Cold
'There are concerns around the low-margin business of Whirlpool India, which has a dominant play only in entry-level products and has missed the premium play, unlike competitors such as LG, Samsung or Haier,' said an industry executive who is part of the deal negotiations.
Analysts believe if the US parent is not happy with the final offers on the table, it may once again divest through the open market route. Another bone of contention is believed to be the royalty payout to the parent in future.
'It's a low margin business and if the parent insists on hiking royalty then the pressures will be far more,' said one of the contenders who had evaluated the opportunity but chose not to pursue.
Reliance, he added, wants a stronger brand play in consumer electronics after it found some success with its licensed labels BPL and Kelvinator to mirror its FMCG strategy where Campa Cola is giving stiff competition in the beverage segment. Reconnect and Wyzr, electronic brands that
Reliance
founded, have met with limited success.
Among the first MNC electronic brands to enter India in late 1980s, Whirlpool hasn't been able to scale up as much as rivals LG, Samsung and Haier, which entered much later, or even homegrown brands such as Voltas and Godrej.
Strategic Choice
Industry players believe Whirlpool still has a sizable brand equity, factories and good presence in smaller cities and towns through distributors. Like Reliance, Havells, too, wants a larger play in appliances such as refrigerators and washing machines which it is yet to achieve with its Lloyd brand. Lloyd is more popular in air-conditioners, where it is among the top four.
The Whirlpool brand will add heft to the Havells portfolio. The Noida-based company enjoys leadership position in electrical goods such as wires, switches, and is a leading brand in fans and small appliances.
Reliance, TPG and Bain have all evaluated buying into the India business of Haier India where its Chinese parent is looking to significantly bring down its ownership to make it into a local company as diplomatic relations between the two countries continue to remain strained. However, all of them had backed out following massive differences in valuations.
Whirlpool Corp's chief financial and administrative officer James W Peters had told analysts last month that the India transaction has 'generated significant interest from large third-party investors'. He said the company expects cash generated by the transaction in the second half of 2025. The parent intends to repay or refinance debt with this money as it had done the last time.
The US parent had said the reduction of its shareholding will result in 'increased autonomy' at the Indian unit, allow it to focus on accelerated growth, and utilise its well-funded business to invest further.