The proposed merger between global suppliers of home appliances, Arçelik A.S. and Whirlpool Corporation (NYSE: WHR ), has been flagged by the UK's Competition and Markets Authority (CMA) as a potential threat to competition in the domestic appliances market. The CMA expressed concerns on Thursday that the merger may result in higher prices, reduced quality, or limited choices for customers.
Arçelik and Whirlpool have until October 5, 2023, to address the CMA's concerns or face an in-depth Phase 2 investigation. The planned merger would see Arçelik and Whirlpool establish a new business comprising their European units, with Arçelik owning 75% of the new company and Whirlpool the remaining 25%.
The merged entity would be the largest individual supplier of washing machines, tumble dryers, dishwashers, and cooking appliances in the UK market - a sector valued at over £3.8 billion (GBP1 = USD1.2214). The two firms' combined strength is especially notable in the low to mid-range price categories of these domestic appliances, where competition is already limited.
Sorcha O’Carroll, CMA Senior Director of Mergers, voiced her worries about the impact of this deal on consumers. She said: "The proposed deal will combine two major providers of home appliances in the UK, meaning that well-known brands such as Hotpoint, Indesit and Beko will sit under one owner. We’re worried that this could reduce the choice of suppliers available to retailers and ultimately to shoppers."
The Turkish company Arçelik agreed earlier this year to acquire the European business of America’s Whirlpool, stating that the combination would "drive value creation for employees, shareholders and European consumers of white goods".
According to the real-time metrics provided by InvestingPro, Arçelik has a market cap of $3809.65 million and a P/E ratio of 20.92. The company has shown a significant revenue growth of 58.49% LTM2023.Q2 and a strong return over the last year. InvestingPro Tips indicates that Arçelik yields a high return on invested capital and analysts anticipate sales growth in the current year.
On the other hand, Whirlpool Corporation, with a market cap of $7130 million, has been experiencing a declining trend in earnings per share. Despite this, the company has raised its dividend for 12 consecutive years.
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