According to a Reuters report, Whirlpool Corporation, the foreign promoter of Whirlpool of India, is seeking to sell up to a 24% stake in the business through block deals in a deal valued at approximately $450 million.
With plans to close the deal by Wednesday, Whirlpool wants to sell its stake for ₹1230 per share, which is 7.6% less than Monday’s closing price.
The company stated in a November U.S. filing that it wants to lower its debt load. As per the disclosed term sheet, Goldman Sachs is offering advisory services for the transaction.
As of the end of December, Whirlpool Corporation held a seventy-five percent ownership stake in the consumer durable goods manufacturer through its subsidiary Whirlpool Mauritius.
They declared in January that it would retain majority control over the Indian unit while selling up to 24 percent of its ownership. The American multinational’s strategy to lower debt and improve its financial position is in line with this move to sell shares.
Up until the end of September, Whirlpool’s profits had been declining for five quarters in a row as a result of increased competition and pricing pressure.
With a provision to offer an additional 11.4 million shares, potentially worth an additional $169 million, the divestment will involve at least 19 million shares in the Indian unit, valued at $282 million based on the proposed price.
Notwithstanding this action, expectations of political stability ahead of the next elections and strong economic growth have kept India’s major stock indices near their all-time highs.
Over the past three months, Whirlpool shares have significantly underperformed, yielding negative returns exceeding 16 percent. However, over the course of the last year, the stock has delivered a more modest return of 3.5 percent.
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