Electrolux buys Chilean appliance maker CTI

STOCKHOLM: Electrolux said on Monday it had agreed to buy Chilean appliance company CTI and a subsidiary as it seeks to further boost its presence in emerging markets.

Electrolux, which has sought to offset weak growth in mature markets by expanding into faster growing markets, said the enterprise value for the deal was 4.4 billion Swedish crowns ($691.5 million).

According to Reuters data, CTI's market capitalisation by the close of Friday trade was $534 million.

"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," Electrolux chief executive Keith McLoughlin said in a statement.

Under the deal, the Swedish company will buy 64 percent of CTI shares owned by Sigdo Koppers and certain associated parties. Electrolux will also begin a cash tender offer to buy 100 percent of the outstanding shares of CTI at 34.87 Chilean pesos ($0.074) per share.

Electrolux will also begin a cash tender offer for all of the outstanding shares of CTI's subsidiary, Somela, also listed on the Santiago Stock Exchange, for 325 pesos per share. CTI has committed to tender its 78.5 percent 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 4.39 pesos per share.

As part of the transaction, CTI will also pay a pre-closing dividend to its shareholders 1.63 pesos per share.

"In total CTI's shareholders will receive 40.90 pesos per share," Electrolux said.

In Chile, CTI manufactures refrigerators, stoves, washing machines and heaters, sold under the brands Fensa and Mademsa. It is the leading manufacturer with a volume market share of 36 percent.

CTI, trough its wholly-owned subsidiary Frimetal, also holds a leading position in Argentina with the GAFA brand. Somela is the largest supplier of small domestic appliances in Chile, Electrolux added.

"Together we will generate significant revenue synergies and cost synergies relating to purchasing and production," McLoughlin added.

Copyright Reuters, 2011