Nidec to Acquire Whirlpool Corporation’s Compressor Business

KYOTO, Japan, April 24, 2018 (GLOBE NEWSWIRE) -- Nidec Corporation (TSE:6594) (OTC US:NJDCY) (the “Company” or “Nidec”) announced today that its Board of Directors has approved a resolution to acquire the compressor business (“Embraco”) of Whirlpool Corporation (“Whirlpool”) (the “Transaction”). For this purpose, Nidec entered into a stock purchase agreement on April 24, 2018 (Japan time).

1. Purpose and background of the Transaction

Nidec has been actively developing a new growth platform with a particular focus on its appliance, industrial and commercial business. As part of this strategy, the Company has pursued strategic acquisitions in the area of the appliance industry. For this purpose, Nidec created a new division named Nidec Global Appliance Division, which consists of Nidec Sole Motor Corporation S.R.L. (formerly, the household motor business of Appliances Components Companies S.p.A. acquired in January 2010), the appliance business of Nidec Motor Corporation (formerly, the motor and control business of Emerson Electric Co. acquired in September 2010), Nidec Motor Corporation Romania (formerly, ANA IMEP S.A. acquired in May 2016) and Nidec Global Appliance Compressors (formerly, Secop Group acquired in July 2017).

Prior to the acquisition of Secop, Nidec’s Global Appliance Division mainly focused on manufacturing and sales of wet appliances such as motors for washing machines, dryers and dishwashers. Through the acquisition of Secop, the Company added compressors to its product portfolio, which allows the Company to expand further into the refrigeration sector. The Company expects the huge refrigerator compressor sector, accounting for 170 million units per year, will provide attractive growth opportunities.

Embraco is well known as the global best in class in the refrigeration compressor sector, on account of its excellent technologies. Through the Transaction, Nidec’s Global Appliance Division is able to strengthen its refrigeration compressor business and expand its product reach and geographic footprint. In addition, ever stricter environmental regulations in major regions like Europe, the Americas and China are stimulating customer demand for eco-conscious and space-saving refrigeration compressors. Embraco’s advanced compressors meet such customer requirements. Nidec also believes its best in class brushless DC motor technology will complement Embraco’s compressors. Furthermore, because motors and compressors have similarities in terms of the nature of components used, Nidec’s Global Appliance Division expects to reduce procurement costs (to the benefit of customers) by taking advantage of synergies of the Nidec group’s purchase capabilities.

Whirlpool and Nidec has established mutual trust through our long standing relationship and are willing to continue to keep this relationship.

2. About the Business to be acquired

(1) Overview of the Transaction
Nidec agreed to acquire from Whirlpool the shares of multiple subsidiaries comprising the Embraco business (excluding Embraco Europe S.r.l). Two Embraco entities located in China (Beijing Embraco Snowflake Compressor Company Limited and Qingdao Eecon Electronic Controls and Appliances Co. Ltd) would be acquired through a newly-created holding company, the details of which have not yet been determined.

(2) Overview of the Business
Embraco consists of multiple subsidiaries. As Nidec is not able to disclose financial information for each of the companies, provided below is an overview of the entire Embraco business.

(1)Trade name                  Embraco (Compressor business of Whirlpool Corporation)
(2)Major acquirees            Embraco Indústria de Compressores e Soluções em Refrigeração Ltda. (Location: Brazil)
    and locations                 Ealing Compañia de Gestiones y Participaciones S.A. (Location: Uruguay)
                                          Embraco Slovakia s.r.o. (Location: Slovakia)
                                          Embraco Luxembourg Sàrl (Location: Luxembourg)
                                          New Holding Company (Name not determined) (Location: Hong Kong)
(3)Business description     Development, manufacture and sale of refrigeration
                                          compressors and electronic components
(4)Employees                    10,464 (September 2017)
(5)Relationship with Nidec  Capital                               None
                                            Personnel                          None
                                            Business                           Non material transaction
                                            Related party relationship None
(6)Three-year financial summary (US$ in millions) (Unaudited)
Fiscal year end                                   December 2015        December 2016  December 2017
Consolidated net assets                           538                          524                      605
Consolidated total assets                         1,082                       1,113                 1,,308
Consolidated sales                                   1,302                        1,257                1,307
Consolidated Adjusted operating profit¹   106                              101                    96
Adjusted operating profit margin¹ (%)        8.1%                            8.1%               7.4%

Notes: (1) Excludes one-time expenses such as litigation cost

(3) Purchase price and considerations
The purchase price is US$1,080 million (on a cash-free and debt-free enterprise value basis) and the consideration will be all cash.

3．Overview of Whirlpool Corporation (December 31, 2017)

(1)Company Name              Whirlpool Corporation
(2)Headquarters                  2000 N M 63
                                            Benton Harbor, MI, 49022-2692, USA
(3)Representative                Marc Robert Bitzer (Director, President and Chief Executive Officer)
(4)Business Description       Development, manufacture and sale of home appliances
(5)Year Established             1955
(6)Sales                               US$21,253 million
(7)Total Equity                      US$4,198 million
(8)Total Assets                      US$20,038 million
(9)Major shareholders            The Vanguard Group (10.2%)
     and ownership                   PRIMECAP Management (5.1%)  
(10)Relationship with Nidec    Capital                           None
                                                Personnel                      None
                                                Business                        Customer for Nidec products including
                                                                                        motors and compressors
                                               Related party relationship None

4．Schedule

(1)Board of                        April 24, 2018 (Japan time)  
    Directors
    resolution
(2)Contract signed         April 24 2018 (Japan time)
(3)Closing                      Expected within 1st half of FY2019 (The Transaction will be filed for
                                      approval with a number of antitrust authorities. Also, the closing may be
                                      deferred in some regions.)
 

5. Future Outlook

Nidec intends to make appropriate disclosures regarding the impact of the Transaction described herein on its consolidated financial performance for the current fiscal year and announce any changes to its financial performance in accordance with the applicable rules of the Tokyo Stock Exchange once such details are determined

Contact:
Masahiro Nagayasu
General Manager
Investor Relations
+81-75-935-6140
ir@nidec.com