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Pending Acquisition | 6 Months Ended
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Jun. 30, 2014
Pending Acquisition [Abstract] |
Pending acquisitions | PENDING ACQUISITIONS Hefei Rongshida Sanyo Electric Co., Ltd. On August 12, 2013, Whirlpool's wholly-owned subsidiary, Whirlpool (China) Investment Co., Ltd., (“Whirlpool China”), reached agreements to acquire a 51 percent equity stake in Hefei Rongshida Sanyo Electric Co., Ltd., a joint stock company whose shares are listed and traded on the Shanghai Stock Exchange (“Hefei Sanyo”). Pursuant to a Share Purchase Agreement (the “Share Purchase Agreement”) among Whirlpool China, SANYO Electric Co., Ltd. (“Sanyo Japan”), and SANYO Electric (China) Co., Ltd. (“Sanyo China”, and together with Sanyo Japan, the “Sellers”), Whirlpool China expects to purchase the 157,245,200 shares (or 29.51%) of Hefei Sanyo currently held by the Sellers (such transaction, the “Share Purchase”). I n addition, pursuant to a Share Subscription Agreement (the “Share Subscription Agreement”) between Whirlpool China and Hefei Sanyo, Whirlpool China expects to subscribe for 233,639,000 shares (which, together with shares purchased pursuant to the Share Purchase Agreement, will aggregate 51%) of Hefei Sanyo (subject to anti-dilution adjustments) issued pursuant to a private placement (such transaction, the “Share Subscription”). Pursuant to the Share Subscription Agreement and as required by the law of the People’s Republic of China, Whirlpool China will be prevented from selling any shares of Hefei Sanyo for 36 months following the close of the Share Subscription. The aggregate purchase price for the Share Purchase and the Share Subscription is RMB 3.4 billion (approximately $547 million as of June 30, 2014), subject, in each case, to certain adjustments for dividends paid on the Hefei Sanyo shares. The purchase price for the Share Purchase is payable in USD based on the exchange rate as of August 9, 2013 and the purchase price for the Share Subscription is payable either in RMB or in USD based on the exchange rate on the payment date. The Company currently intends to fund the total consideration for the shares with cash on hand or other public or private debt financing depending on the timing of the closing and market conditions. The transaction also includes the commitment of capital and technical resources to enhance Hefei Sanyo’s research and development and product innovation. The Share Purchase Agreement and Share Subscription Agreement contain representations and warranties regarding the shares of Hefei Sanyo, the Sellers’ and Hefei Sanyo’s authority, and customary covenants. The Share Purchase and Share Subscription are subject to customary closing conditions and the Share Purchase is subject to certain termination rights, including Sellers’ fiduciary termination right. In addition, the Share Purchase and the Share Subscription are subject to regulatory approvals. Approvals from the Ministry of Commerce of the People’s Republic of China (antitrust and foreign strategic investment), the State-owned Assets Supervision and Administration Commission of the State Council, and Hefei Sanyo shareholders (Share Purchase and Share Subscription) have been received. The China Securities Regulatory Commission approval (including waiver of a tender offer), as well as regulatory reviews and approvals by other governmental authorities, have not yet been received. The Share Purchase and Share Subscription are cross-conditional on one another. Under certain circumstances, including if the Share Purchase does not close by December 31, 2014 (or June 30, 2015 if the tax payment certificate has not yet been obtained), the Sellers will be entitled to retain a $20 million breakup fee paid by Whirlpool in February 2014. Both the Share Purchase and the Share Subscription are currently expected to close by the end of 2014. Indesit Company S.p.A. On July 10, 2014, we entered into share purchase agreements with (i) Fineldo S.p.A. (“Fineldo”, and the share purchase agreement with Fineldo, the “Fineldo SPA”), a company incorporated under the laws of Italy, concerning the purchase and sale of 42.7% of the issued share capital (the “Fineldo Shares”) of Indesit Company S.p.A., a joint stock company incorporated under the laws of Italy whose shares are listed on the stock market organized and managed by Borsa Italiana S.p.A. (“Indesit”), (ii) Ms. Franca Carloni, Mr. Aristide Merloni, Mr. Andrea Merloni, Ms. Maria Paola Merloni, Ms. Antonella Merloni, Ms. Ester Merloni, Fines S.p.A. and, following approval by the Court of Ancona (as described below), Mr. Vittorio Merloni (the “Family SPA”), collectively concerning the purchase and sale of 13.2% of Indesit’s issued share capital (the “Family Shares”), and (iii) Ms. Claudia Merloni (the “Claudia Merloni SPA” and, together with the Fineldo SPA and the Family SPA, the “Stock Purchase Agreements”) concerning the purchase and sale of 4.4% of Indesit’s issued share capital (the “Claudia Merloni Shares”). In the aggregate, pursuant to the Stock Purchase Agreements, we will acquire 60.4% of Indesit’s issued share capital. This represents 66.8% of Indesit’s issued and outstanding stock. This position will allow us to control both the ordinary and the extraordinary shareholders’ meetings of Indesit. Pursuant to the Fineldo SPA, the provisional aggregate purchase price for the Fineldo Shares is approximately €537 million (approximately $735 million as of June 30, 2014). The provisional aggregate purchase price is subject to certain pre-closing adjustments, upwards or downwards, based on the difference between Indesit’s yearly average consolidated net debt at December 31, 2013, and at the 10th business day prior to the expected Closing Date (the “Calculation Date”) and the difference between Indesit’s average consolidated net working capital as of the date which is one year prior to the Calculation Date and as of the Calculation Date. Average consolidated net debt will be calculated based on the daily average over the one-year period ending on the relevant date and average consolidated net working capital will be calculated based on the net working capital amount as of the last day of each of the 12 calendar months preceding the applicable date. If the resulting amount (whether positive or negative) is lower than or equal to €10 million (approximately $14 million as of June 30, 2014), such amount will be disregarded and the final purchase price will remain equal to the provisional purchase price. If the resulting amount (whether positive or negative) is higher than €10 million, the excess over €10 million will be added to the provisional aggregate purchase price. The aggregate purchase price for the Family Shares under the Family SPA is approximately €166 million (approximately $227 million as of June 30, 2014), and the aggregate purchase price for the Claudia Merloni Shares under the Claudia Merloni SPA is approximately €55.3 million (approximately $76 million as of June 30, 2014). We currently intend to fund the aggregate purchase price for the Fineldo Shares, the Family Shares and the Claudia Merloni Shares with cash on hand, together with private, domestic and international public debt financing, depending on the timing of the Closing Date and market conditions. The Stock Purchase Agreements contain customary representations and warranties regarding each of the sellers, the purchaser and the Indesit shares as well as customary covenants. The Stock Purchase Agreements are also subject to customary closing conditions. In addition, the Fineldo SPA and the Family SPA are subject to the following additional closing conditions: (i) that the closing of the sale and transfer of all of the Fineldo Shares and the Family Shares pursuant to the respective stock purchase agreements shall occur on the same date (the “Closing Date”); and (ii) that the closing of the sale and transfer of all of the Claudia Merloni Shares pursuant to the Claudia Merloni SPA shall have occurred on or prior to the Closing Date. Furthermore, the Fineldo SPA is subject to the following additional closing conditions: (A) receipt of antitrust approvals by the European Commission and any other required antitrust approvals; and (B) authorization from the Court of Ancona for Aristide Merloni, in his capacity as legal guardian of Mr. Vittorio Merloni (the controlling shareholder of Fineldo), to vote at the shareholders’ meeting of Fineldo in favor of the sale of the Fineldo Shares to the Company. Moreover, the Family SPA is subject to the following additional closing condition that, after obtaining approval from the Court of Ancona, Vittorio Merloni become a party to the Family SPA concerning the purchase and sale of the 1.2% of Indesit’s issued share capital that he holds directly (such amount is included in the applicable percentages and monetary amounts described above). The Fineldo SPA contains a €40 million (approximately $55 million as of June 30, 2014) liquidated damages clause payable by either party (plus additional damages, if any) in case that party breaches its obligation to consummate the closing. In addition to customary business representations and warranties concerning Indesit and related indemnification provisions from Fineldo, the Fineldo SPA also contains a special indemnity from Fineldo with respect to certain proceedings. Fineldo’s indemnification obligations under the Fineldo SPA in respect of breaches of representations and warranties and the above-mentioned special indemnity are subject to an aggregate cap of 10% of the purchase price of the Fineldo Shares. The closing of the acquisition of the Claudia Merloni Shares under the Claudia Merloni SPA occurred on July 17, 2014. Under the Fineldo SPA, the Company has agreed with Fineldo (i) not to exercise the voting rights attached to the Claudia Merloni Shares, nor file any slate of candidates for the appointment of the board of directors and/or the board of statutory auditors, until the closing of the purchase of the Fineldo Shares and (ii) to resell such Claudia Merloni Shares within the following two years if closing under the Fineldo SPA does not occur by July 31, 2015. The Closing Date for the acquisition of the Fineldo Shares and the Family Shares is expected to occur by the end of 2014. Upon closing of the Fineldo SPA and the Family SPA, the Company will be required to carry out a mandatory tender offer (the “Tender Offer”) for the remaining shares of Indesit in accordance with Italian law at the highest price per Indesit share paid by the Company under the Share Purchase Agreements, which is currently contemplated to be equal to €11 per share ($15.06 per share as of June 30, 2014). If the purchase price adjustment mechanism under the Fineldo SPA results in the payment of a higher price per share on the Closing Date, such higher price will apply also to the subsequent Tender Offer. The Company cannot provide any assurances regarding whether it will be able to acquire any additional shares of Indesit pursuant to the Tender Offer, and if so, how many such shares it will be able to acquire. The Company expects to fund the acquisition of any shares purchased as a result of the Tender Offer with cash on hand, together with private, domestic and international public debt financing, depending on the timing of the closing date of the Tender Offer and market conditions. On July 10, 2014, we also entered into an exclusivity agreement (the “Exclusivity Agreement”) with Fineldo, Mr. Vittorio Merloni, Ms. Franca Carloni, Mr. Aristide Merloni, Mr. Andrea Merloni, Ms. Maria Paola Merloni, Ms. Antonella Merloni, Ms. Ester Merloni and Fines S.p.A. (the “Sellers,” and, excluding Fineldo, the “Other Sellers”), pursuant to which the Sellers have agreed not to initiate, solicit, agree or execute with any other person any transaction concerning the Indesit shares or the Indesit group until the earliest of: (i) the Closing Date, (ii) July 31, 2015, or (iii) only if the Court of Ancona does not grant the authorizations regarding Mr. Vittorio Merloni described above, December 31, 2014. In case of breach of such undertakings by Fineldo or its related parties (other than the Other Sellers), the Exclusivity Agreement contemplates €40 million liquidated damages payable by Fineldo (plus additional damages, if any).

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