Swedish multinational home appliance manufacturer Electrolux is a step closer from selling its SA water-heating business to China-based Haier Smart Home for nearly R2.5bn after the Competition Commission recommended that the deal be approved.
The competition watchdog on Wednesday said the proposed deal could go ahead as it did not undermine competition in the sector.
“The commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market. To address public interest concerns, the merger parties shall establish an employee share ownership programme (ESOP) for qualifying workers within 24 months from the merger implementation date,” it said.
“In addition, Electrolux SA will not retrench workers as a result of the merger for two years following the merger implementation date.”
Electrolux SA’s water-heating business is housed under Kwikot, which it bought in 2016 for R3.1bn from RMB Corvest. The 121-year-old Kwikot manufactures and distributes hot water systems, solar water heating systems, valves, drip trays, insulation, heat pumps and a wide range of stainless-steel kitchenware and sanitary ware for domestic and commercial use.
Electrolux’s home appliance businesses, which houses brands such as AEG and Kelvinator, do not form part of the proposed transaction, which will now await the Competition Tribunal’s approval.
The deal is part of Electrolux’s group-wide programme to dispose of noncore business as it turns its focus to the core home appliances business.
Haier said Kwikot was a leading water-heater manufacturer in SA, with a double-digit ebitda (earnings before interest, taxes, depreciation, and amortisation) margin, and operated well-established distribution channels, installation network and after-sales service system to provide users with speedy response and quality services.
Kwikot’s net sales in 2023 related to this business amounted to about R1.9bn. The company changed hands several times over the years, it was owned by Boumat until it sold the entity to RMB Corvest in 1999.
According to Saving Energy, SA’s water heating market is dominated by two firms, Kwikot and Ariston, who collectively control 85%, with the former the most dominant player.
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