Majority stake in Climaveneta owner DeLclima will be followed by tender for remaining shares, valuing acquisiion at £480 million
Mitsubishi Electric Corporation said it has entered into an agreement to purchase from De’Longhi Industrial shares representing approximately 74.97 per cent of the share capital of DeLclima, the Italian owner of chiller maker Climaveneta and data centre cooling specialist RC Group.
The deal comes as Mitsubishi Electric looks to extend its air conditioning reach beyond its current focus on packaged and multi-room systems, and to become a full-scale ‘climate solutions provider’, particularly in Europe where F-Gas regulations and energy efficiency demands will drive customer habits.
After the closing of this transaction, a mandatory tender offer will be launched by Mitsubishi Electric in order to acquire the remaining shares representing approximately 25.03 per cent of the share capital of DeLclima, in compliance with Italian financial laws.
The total expected purchase price for 100 per cent ofDeLclima’s shares is approximately €664 million (£480 million) - based on a per-share price of €4.44.
The completion of the majority stake requires clearance from antitrust authorities and the completion of the sale of DL Radiators an indirect subsidiary of DeLclima, DL Radiators.. In addition, under the agreement the €4.44 per-share price will be increased by an additional amount to be calculated on a daily basis, starting from 30 June, 2015 up to the closing date.
The estimated per-share amount of such price increase is approximately €0.07, assuming that the closing of the Transaction will take place at the end of November 2015.
Mitsubishi Electric is currently assessing the impact of this acquisition on its finances and will promptly make an announcement, should there arise any necessity to update its financial forecast or to disclose any information.
In explaining the reasons for the purchase, Mitsubishi Electric said it has a global presence in HVAC systems and Europe in particular is an important market after Japan.
As the European air conditioning market matures, it further requires market players both to provide value-added products such as energy-saving products and to comply with environmental regulations (namely F-Gas), and in response, Mitsubishi Electric has grown its business in the region with a particular focus on room and packaged air conditioning as well as multi air conditioning for buildings.
The acquisition of DeLclima represents Mitsubishi Electric’s full-scale entry into the chillers business and will enable the company to expand its business portfolio, which will be important in achieving continuous growth and increasing market presence.
Moreover, the acquisition will allow Mitsubishi Electric to adequately respond to environmental regulations (F-Gas regulations), which are expected to become even more important in the coming years.
The firm said that Climaveneta offered the following strengths:
- Leading market share in Europe and strong brand supported by customer trust and high quality in the chillers business;
- Energy-saving and low-noise technology, and superior development/design and efficient production capabilities that allow product customisation and quick delivery; and
- System-solution capabilities, such as remote monitoring of HVAC equipment.
It added that RC Group in turn offered:
- Expertise in specialised air conditioning, such as air conditioning for server rooms, a major business for the company
Demand for chillers is expected to remain strong in Europe, the firm said, which is of high strategic importance for Mitsubishi Electric’s HVAC business. Acquiring DeLclima will allow Mitsubishi Electric to enhance its product lineup for large commercial machines, especially for chillers, and to become a comprehensive provider of HVAC systems ranging from residential to commercial.
Mitsubishi Electric aims to increase its competitiveness and enlarge its business by enhancing its solution-type business with DeLclima’s system-solution capabilities and by realising synergies, such as by strengthening the company’s global presence with DeLclima’s existing global footprint in various countries, including China.
Mitsubishi Electric expects to leverage its newfound synergies in the following way:
- Increasing sales by pursuing cross-selling opportunities for both companies;
- Integrating the companies’ control systems to strengthen HVAC solution capabilities; and
- Adding more value to DeLclima’s products by utilising the components manufactured by Mitsubishi Electric, such as inverters, heat exchangers, fans and compressors.