Whirlpool is pulling out of South Africa – and taking a nearly R1 billion hit in the process
- Appliance maker Whirlpool – until recently held up as an important example of foreign direct investment – is pulling out of South Africa.
- The parent company's financials show it will take a hit of not much less than R1 billion to do so.
- Whirlpool South Africa won't say who will take over responsibility for servicing its fridges, ovens, and washing machines, but a regulatory filing in Botswana points to a Swiss connection.
- For more stories, go to www.businessinisder.co.za.
Appliance maker Whirlpool South Africa, which is also responsible for the Indesit, Ariston, and KIC brands in South Africa, has been sold.
On Tuesday the local operation confirmed an agreement had been entered into at the end of June, and said it expects the sale to close in the third quarter – after its parent company warned shareholders how much its exit from South Africa will cost.
In reporting its second quarter financial results, the New York listed Whirlpool Corporation said selling its South African operations would come with a $35 million write-down of assets, and a $33 million "cumulative foreign currency translation adjustments", a total equivalent to a little under R950 million.
The parent company provided no further details on the transaction.
Whirlpool South Africa was not much more forthcoming. It would not say who the buyer is, instead describing and "ownership group is comprised of former Whirlpool executives who are passionate about the brand, the region and making home appliances that help families in and around South Africa."
Asked who would be taking responsibility for service and warrantee support on its fridges, ovens, washing machines, and other appliances in South Africa, the local operation said it had "reached an agreement with the new owners" that "will be able to help anyone who has a problem with an existing [Whirlpool] and KIC products.
A regulatory filing with the Competition Authority of Botswana some two weeks ago provides some more details. It describes a transaction in which a newly-formed South African company, KIC SA, will buy assets from Whirlpool South Africa.
According to the filing, KIC SA will ultimately be controlled by Stefan Egli, who wholly owns Abeg Immo GmbH, a Swiss company "involved in the business of developing, owning and leasing residential property."
Although the filing does not say as much, this suggests that Egli and his company will also take over responsibility for Whirlpool and related brandnames in South Africa.
"Along with the purchase of the KIC brand and related assets, the new ownership group will also distribute Whirlpool Corporation's other brands in South Africa and surrounding countries - including Whirlpool, Indesit, and Ariston brands," Michele Caputo, the current managing director of Whirlpool in the Southern African region, separately told Business Insider.
Caputo did not respond to a question on whether Whirlpool's exit should be read as a vote of no confidence in South Africa.
Whirlpool was counted among the major American investors in South Africa. In March last year its new R100 million investment in a new manufacturing line in KwaZulu-Natal was lauded by the South African government.
"This increased and expanded investment reaffirms Whirlpool’s commitment to the country," said then trade and industry minister Rob Davies at the time.
Caputo said that until the sale is concluded, Whirlpool will continue to operate as usual in South Africa.
See also: Ramaphosa just activated a law that scares foreign investors – and makes it harder for them to fight expropriation
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