Hitachi-Beko Merger Tipped After Appliance Deal Closed
Turkey’s leading appliance maker Arcelik have confirmed that they will acquire a 60% stake in Hitachi home appliances, a move that could see the local operation merged with Beko, an appliance business the Turkish business already owns.
Overnight Arcelik and Hitachi announced that they will A$393 million for the business which sells refrigerators to Harvey Norman and Bing Lee.
Currently 80% of Hitachi’s home appliances sales are in the domestic Japanese market.
Arcelik will also take over Hitachi factories in China and Thailand as well as 10 sales companies including Australia, with total revenue estimated at US $1 billion.
Some of the recent Hitachi products sold in Australia are manufactured in Thailand, the rest is manufactured in Japan.
“The picture is now complete in terms of Asia-Pacific, and we have good enough infrastructure from which to grow,” said Arcelik CEO Hakan Bulgurlu during an interview with Nikkei Asia after signing the share purchase agreement.
Due the need for regulatory approval where both companies have a presence, the joint venture may not be finalized until April 2021, after which the new company will unveil its five-year business plan, according to Bulgurlu.
Apart from its joint venture with Hitachi, Arcelik has been aggressively expanding into Asia. It has a joint venture with India’s Tata Group and has acquired companies in Pakistan and Bangladesh. It also opened a factory in Thailand.
“This will not only help us compete against our Chinese and Korean rivals, but will give Hitachi more global exposure via our existing sales and distribution channels,” Bulgurlu said. “It also gives Arcelik scale in the Asia-Pacific region behind the premium Hitachi brand.”
According to the CEO, the company is “looking for double-digit growth every year.” The joint venture will make additional investments into Hitachi’s existing factories in China and Thailand. New investments in other countries in East Asia may also be on the agenda, he said.
Bulgurlu emphasized how important it was to lead in Asian markets. “The global appliance market is projected to grow at 3.5%, whereas the market in Asia grows 6% to 7% annually.”
Arcelik CEO Hakan Bulgurlu is confident of Asia’s continued high growth in home appliances.
Arcelik is a subsidiary of Turkey’s largest conglomerate Koc Holding, with businesses ranging from automotive manufacturing to finance.
Bulgurlu said both Arcelik and Koc Holding are “very interested” in Hitachi’s proprietary Internet of Things platform, called Lumada, and expressed hope that beyond this joint venture “Koc Holding and Hitachi will find many other areas in which to cooperate.”
With 22 factories in eight countries, Arcelik posted 5 billion euros ($6.1 billion) in consolidated revenue last year, with around 45% of revenue coming from Europe, where Hitachi has latched onto Arcelik’s strong market share and its Beko brand.
Speculation is that the local Beko operation which is located on the Gold Coast and the Hitachi operation which is based in Sydney will be merged.