) climbed 1.1% after the leading worldwide home appliances producer
declared its latest agreement with Fineldo S.p.A.
The two companies penned an agreement per which Fineldo will sell
its stake in Italy'sIndesit Company S.p.A. (IND) to Whirlpool for
$1.03 billion. Fineldo, being a holding company, had a controlling
interest in the Merloni family-owned Indesit, which is a leading
producer and distributor of domestic appliances in Europe.
Also, Whirlpool entered into an obligatory share purchase deal with
some of the Merloni family members, for their shares in Indesit.
Whirlpool's agreement with Fineldo involved a 42.7% stake in
Indesit, whereas its acquisition of Merloni family shares secured
13.2% stake for Whirlpool. Additionally, the company partnered with
individual shareholder Claudia Merloni for a 4.4 % stake in
Together, this chunk of Indesit shares represents 66.8% voting
rights in the company. However, the acquisition will await judicial
and antitrust approvals, and is anticipated to close by late 2014.
In all the aforementioned share purchase agreements, shares will be
bought at a price of $15.06 a share, with the exception of the
Fineldo agreement in which the share price will be subject to
various adjustments. Whirlpool intends to sponsor these purchases
with cash, coupled with debt financing from private, domestic and
The acquisition is likely to bring synergies for both Whirlpool and
Indesit. Whirlpool's exclusive quality-oriented perspective towards
achieving long-term growth along with its recognition on a global
platform is likely to be a suitable partner for Indesit. On the
other hand, the acquisition of Indesit will facilitate Whirlpool to
solidify and maintain its foothold in the European appliances
Moreover, the combination of the two companies will enable them to
undertake investments in technology and innovations, which will
further enhance their efficiency. However, Whirlpool currently
carries a Zacks Rank #4 (Sell), as its adjusted earnings per share
came in at $2.20 in the first quarter of 2014, way below the Zacks
Consensus Estimate of $2.30.
However, other-better ranked retail stocks to consider include
Christopher & Banks Corp.
Citi Trends, Inc.
The Men's Wearhouse, Inc.
), each carrying a Zacks Rank #1 (Strong Buy).
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