Synopsis
Whirlpool Corporation announced it will reduce its stake in Whirlpool of India Limited to about 20% by late 2025. Following the news, shares dropped 20% to Rs 1,262. Despite the divestment, Whirlpool remains committed to the Indian market, aiming for long-term growth and financial stability.Key Takeaways
- Whirlpool plans to cut its stake to 20% by 2025.
- Stock price fell 20% to Rs 1,262 after the announcement.
- Expected net cash proceeds of $550 million to $600 million.
- Whirlpool India remains crucial for global operations.
- Financial strategy aims to enhance shareholder value.
New Delhi, Jan 30 (NationPress) The US-based home appliances giant Whirlpool Corporation revealed its intention to decrease its stake in its Indian subsidiary, Whirlpool of India Limited, to approximately 20 percent by mid to late 2025.
In the early trading session, Whirlpool India's shares plummeted by 20 percent, hitting the lower circuit at a price of Rs 1,262.
The company, which currently possesses a 51 percent stake, disclosed in a stock exchange announcement that it intends to divest shares through one or more transactions, while still maintaining its status as the largest shareholder post-sale.
Whirlpool anticipates generating $550 million to $600 million in net cash from this proposed stake reduction.
Despite the divestment, the company reiterated its dedication to the Indian market. In its stock exchange announcement, it emphasized that Whirlpool India remains a vital component of its global operations, possessing strong long-term growth potential.
"Whirlpool India will continue to be a significant part of Whirlpool Corp's portfolio, and we firmly believe in its strong long-term growth trajectory," stated the company in its filing.
The firm also highlighted that this move would provide Whirlpool India with increased flexibility to adjust to evolving industry trends and accelerate growth.
"By lowering our stake, we are enabling Whirlpool India to function with enhanced independence, facilitating faster expansion," the statement mentioned.
The consumer electronics entity also assured that its brand licensing, technology agreements, and transition plans will persist to ensure business continuity and foster long-term growth.
Jim Peters, the company’s Chief Financial and Administrative Officer, indicated that substantial measures have been taken to bolster its financial standing, including the repayment of $500 million in debt and optimizing working capital.
Peters further explained that the company’s financial strategy for 2025, including the forthcoming stake sale, is aimed at maximizing shareholder value and improving the company’s balance sheet.
In the six-month period from July to December 2024, Whirlpool Corp recorded $0.4 billion in net sales from India, with earnings before interest and taxes (EBIT) totaling $3 million, reflecting a margin of 0.7 percent.
The company is scheduled to disclose its December quarter results (Q3) on February 4. In early trading, shares of Whirlpool India dropped by 20 percent, trading at Rs 1,262.
