21st Century Business Review
2024-07-19 20:54Published on the official account of Guangdong 21st Century Business Review
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01Haier Smart Home plans to spend 2.45 billion South Africa rand, about 980 million yuan, to acquire 100% of the equity of Electrolux's "ESA" company, and the target asset is the core century-old water heater brand Kwikot.
Founded in 1903, 02Kwikot has products such as electric water heaters, solar water heaters, gas water heaters and heat pumps, and its net sales related to the water heater business in 2023 will be approximately R1.9 billion South Africa, or about RMB 750 million.
03This acquisition will help Haier Smart Home expand the development of other white goods such as refrigerators and washing machines in the South Africa market, while leveraging Kwikot's channel advantages.
04In addition, Haier Smart Home also faces headwinds in the Middle East and Africa market, and the acquisition of Kwikot may be its game-changing method, which will help increase the company's market share in the region.
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Reporter丨Yang Song Yan Ziwei
Editor丨Yan Ziwei
Haier Smart Home quietly made a deal.
On July 18, the company announced that it intends to spend 2.45 billion South Africa rand, or about 980 million yuan, to acquire 100% of the shares of Electrolux's "ESA".
The target company is engaged in water heater business in South Africa, and its core asset is the century-old water heater brand Kwikot.
This is the second foreign brand that Li Huagang led the team to acquire after taking the helm.
Image via AWE
At the end of last year, the company, with a market value of 250 billion yuan, planned to acquire the commercial refrigeration business of Carrier Group for 4.559 billion yuan in cash.
Li Hua was born in sales and was promoted to chairman of Haier Smart Home in 2022.
profitable
Li Huagang's team picked up a "cheap".
Kwikot, a South Africa brand founded in 1903, has electric water heaters, solar water heaters, gas water heaters and heat pumps.
Image from Kwikot's official website
With the acquisition of Kwikot, Haier Smart Home only needs to pay 2.45 billion South Africa rand. You know, in 2017, the Sweden company Electrolux took over Kwikot at a price of 3.18 billion South Africa rand.
The difference between the two is 730 million South Africa rand.
Electrolux also said that the divestment, including exchange rate losses, will result in an investment gain or loss of about 600 million Sweden kroner. As early as July last year, it planned to divest the Kwikot business.
"In recent years, many European home appliance brands have been acquired by Chinese companies. Electrolux is one of the few remaining companies, but in fact, it wants to sell itself. Last year, it was rumored that Electrolux was going to sell his body beauty, and the price may not have been negotiated. ”
Home appliance analyst Liu Buchen told the "21CBR" reporter that Electrolux mainly focuses on the European market, and this time the divestment of the South Africa water heater business is to sell part of the assets first.
The image is from the official website of Electrolux
Kwikot is not a hot potato, but a potential target.
South Africa is the second largest economy in Africa, with a total population of about 61.4 million. Selling water heaters locally is a promising business.
Local power outages were once the norm. An executive in charge of Electrolux's South Africa operations has revealed that in his first week in office, 1,600 solar panels were installed on the roof of the warehouse due to power outages.
He believes that there is potential to sell solar water heaters in South Africa. Kwikot has a wide range of clean energy products.
According to Electrolux, the net sales related to the water heater business in 2023 will be about 1.9 billion South Africa rand, about 750 million yuan.
Haier Smart Home also said that Kwikot's EBITDA margin was in the double digits.
Water heaters are also the business that Haier Smart Home is working on. In 2023, the revenue of its aquaculture industry will be 15.34 billion yuan, a year-on-year increase of 8.5%.
"Our water heater business, the international layout is not enough." The company's annual report pointed out that this sector will usher in significant development opportunities.
Leverage your strength
In the Middle East and Africa market represented by South Africa, Haier Smart Home has encountered resistance, and the growth rate has shown signs of decline.
According to the financial report, its Middle East African market will have a transaction revenue of 1.93 billion yuan in 2023, less than 1 percentage point of total revenue, and will record negative growth for the first time in five years.
The acquisition may become a game-breaking method for Li Huagang's team.
In addition to products, Haier Smart Home also took a fancy to Kwikot's channels. It has been working in South Africa for 100 years and has mature factories, sales channels and after-sales systems.
Haier Smart Home said that after the completion of the transaction, it will use Kwikot's channel advantages to expand the development of Haier refrigerators, washing machines and other white goods in the South Africa market.
"With the help of the acquisition, the local factory is available, the after-sales service is there, and the channel is available, and Haier Smart Home can directly use it. This can save a lot of time and costs. ”
Liu Buchen pointed out that if the business is expanded from scratch, it will have to contact local distributors, engage in product certification, recruit sales personnel, and go through various legal procedures, and the front line is very long.
With the help of strength, Haier Smart Home hopes to gnaw the fat of the "Middle East and Africa" market.
This acquisition is an important strategy for it to improve its layout in the Middle East and Africa and deepen its global brand creation.
According to Euromonitor International, in 2023, the Middle East and Africa will have a population of 1.73 billion. This will give rise to a huge demand for home appliances.
"After the layout of developed countries is completed, Haier Smart Home will gradually extend to developing countries." Liu Buchen explained that South Africa is equivalent to a gap market, and filling such gaps will make Haier's global map more and more complete.
The picture shows Haier's partner summit in the Middle East and Africa
In May this year, the company held a partner summit in Egypt to deepen ties with local partners.
Two months later, the company entered into a partnership with SPA Samha, a subsidiary of Algeria business giant Cevital.
In March last year, the construction of Haier Egypt Ecological Park began, and Li Huagang attended the groundbreaking ceremony, saying that "actively promote the construction of household appliance industry clusters, so that Egypt manufacturing can go out of Egypt and into the world."
Image courtesy of Haier
The total investment of the above project is 160 million US dollars, and the total design capacity will exceed 1.5 million units, producing air conditioners, washing machines, TVs, refrigerators, freezers and other categories.
After Kwikot becomes a member of the Haier family, it can complement the Egypt Eco Park, and the two can synergize and seize the market.
For example, Haier's home appliances manufactured in Egypt can be sold through Kwikot's South Africa channel; Kwikot's water heaters can also be stationed in Haier's stores in Egypt.
Output experience
In the two years of the Chinese New Year, the foreign market contributed more than half of Haier Smart Home's revenue.
Its overseas revenue exceeded 135 billion yuan last year. In the first quarter, its overseas revenue rose 4%.
"Accelerate the localization of the regional supply chain, reduce costs and improve response speed through the optimization of localized production, warehousing and logistics."
Li Huagang said that multi-platform collaboration and other measures will be taken to promote the improvement of overseas profitability.
In the Middle East and Africa market, Haier Smart Home has the ability of "localized R&D, localized manufacturing, and localized marketing".
For example, in view of the wearing characteristics of Saudi users wearing headscarves and robes, in order to allow locals to wash multiple robes at one time, the Haier Smart Home team developed a washing machine with the "Abaya Care" robe washing function in just a few months.
With the acquisition of Kwikot, Haier Smart Home promised to take over its home appliance business personnel.
It will have access to a mature R&D team that will help create products that match the needs of customers in South Africa.
It was also a problem to integrate the original team into the Haier system. South Africa has 11 official languages, and communication is not easy.
Fortunately, Haier has sufficient experience in mergers and acquisitions and has a mature model.
Li Huagang once took the merger and acquisition of General Household Appliances in United States as an example, saying that after completing the acquisition, he did not replace a piece of equipment, did not send a person, and only did one thing - the introduction of Haier's "one-in-one" model.
In just two years, General Appliances turned losses into profits, and in the six years since the merger and acquisition, its scale has increased by a net of 5 billion US dollars.
After the completion of the acquisition of South Africa Water Heater Company, Haier Smart Home may continue this strategy and introduce the one-in-one management method in Kwikot. The transaction is expected to close in the fourth quarter of 2024.
The acquisition is just the beginning, and after the completion of the transaction, there will be no fewer problems, and Li Huagang's team needs to solve them one by one.
In addition to the annotations, the picture comes from the financial report of Haier Smart Home
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