BENTON HARBOR, Mich. — Whirlpool Corp. announced it has entered into an agreement to sell the company's Embraco compressor business to Nidec Corp. for a cash purchase price of $1.08 billion, subject to customary working capital and indebtedness adjustments. The transaction is expected to close in early 2019 and is subject to regulatory approvals and other customary closing conditions.

“We are proud of our strong portfolio of global consumer brands,” said Marc Bitzer, CEO, Whirlpool Corp. “Since Embraco operates in the business-to-business space, this transaction enhances our strategic focus on investing in and growing our consumer-facing business. “The planned tender offer further demonstrates our commitment to returning capital to shareholders, consistent with our balanced capital allocation strategy."

Headquartered in Brazil, Embraco has been a Whirlpool majority-owned business unit since 1997. The business has a workforce of approximately 11,000 employees across eight global manufacturing facilities located in Brazil, Italy, China, Slovakia, and Mexico. Embraco also maintains commercial offices in the U.S. and Russia.

The Embraco business is currently reported as part of Whirlpool Corp.'s Latin America segment. In fiscal year 2017, Embraco contributed approximately $1.3 billion to Whirlpool's net sales with margins approximating the segment average.

The transaction is not expected to have a material impact on Whirlpool Corp.'s 2018 financial results.

As previously announced, Whirlpool expects to cease operations and end production at Embraco's Italy facility, which is subject to a separate agreement with local authorities and unions. Therefore, the Embraco Italy facility is not included in the sale to Nidec Corp.

"Nidec has been a trusted supplier for decades, and we look forward to building on that relationship in the future," said João Carlos Brega, president of Whirlpool Latin America. "Embraco will continue to be a highly-valued supplier to Whirlpool, and we expect Embraco's customers and employees to thrive under Nidec's ownership in the future."

Citigroup Global Markets Inc. acted as exclusive financial advisor, and Linklaters LLP and Cleary, Gottlieb, Steen and Hamilton LLP acted as legal advisors for Whirlpool.

Whirlpool Corp. intends to launch a "modified Dutch Auction" tender offer for up to $1 billion of its common stock at an anticipated price per share not less than $150 and not greater than $170, subject to market conditions. The tender offer was expected to launch on April 26.

The company has arranged committed financing in an amount approximating the net proceeds from the Embraco transaction and, consistent with the company's balanced approach to capital allocation, intends to use the proceeds of the financing to fund the tender offer under the company's existing share repurchase authorization. The company expects to repay the financing amount with the proceeds from the sale upon closing of the Embraco transaction.

Subsequent to the completion of the tender offer, the company intends to opportunistically execute open market share repurchases throughout 2018. Share repurchases had previously been suspended since the end of 2017 pending the completion of the Embraco sale process and related negotiations.

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Publication date: 04/27/18