F&P Appliances to buy Italian cookware company

Fisher & Paykel Appliances is to buy Italian-based cookware business Elba SpA from De' Longhi SpA for 78 million euros ($158 million).

Appliances announced today that senior and new bridging bank debt would initially be used to fund the acquisition, which would subsequently be funded by a combination of equity and debt.

Appliances would be raising about $65 million equity, with an underwritten institutional placement being undertaken today via a bookbuild process to raise $55 million.

A trading halt was granted by the New Zealand and Australian stock exchanges while the institutional placement was undertaken.

Trading in Appliances shares was expected to recommence tomorrow, Appliances said.

Appliances would offer eligible New Zealand and Australian registered shareholders the opportunity to subscribe for up to $5000 worth of shares through a share purchase plan expected to raise a minimum $10 million.

Appliances CEO and managing director John Bongard said the purchase provided a more comprehensive range of kitchen products for distribution through Europe.

Elba's European-styled cooking products complemented the current range of Appliances' products offered in Europe.

The addition of Elba's product range would provide economies of scale to Appliances' European and British distribution which would be realised over the next one to two years, Mr Bongard said.

Manufacturing cost synergies would be realised between Appliances' three cookware manufacturing plants, in New Zealand, the US and Italy.

For the year ending March 2007, the acquisition was expected to increase Appliances' sales by about 70 million euros and contribute, after deducting debt funding costs but before acquisition amortisation, 2.3 million euro to net profit after tax (NPAT).

Once the synergies were in place the purchase was expected to add 5.6 million euros a year to NPAT.

Elba, based near Treviso, Italy, manufactures and distributes cookware products including freestanding cookers, built-in ovens and cooktops.

It exports to at least 54 countries with a particular strength in Britain.

De' Longhi CEO Fabio De' Longhi said the sale of Elba was in line with his company's strategy to focus on in its key product categories of heating, air conditioning, food preparation, cleaning and ironing.

But De' Longhi would continue to be the exclusive distributor of De' Longhi branded cookers in the Australian, New Zealand and Italian markets.

For the 12 months ending December 31, 2005 Elba had sales of 83.9 million euros.

- NZPA