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Electrolux to split foodservice equipment division into separate public entity

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Electrolux has taken the first steps towards stripping the Professional Products division from its business and trading it as a separate publicly-listed entity.

Under new plans outlined by the Swedish-headquartered manufacturer, the Professional division – which is responsible for all its commercial foodservice equipment sales – would trade on the Stockholm Nasdaq, leaving the existing company to focus on household appliances.

Sales of white goods account for the vast majority of Electrolux’s business, with Professional products, which also includes laundry equipment, generating around 7% of its turnover.

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In the UK, Electrolux Professional made an operating profit of £3.57m on sales of £34m for the year to 31 December 2017, which is the most recent year for which accounts are publicly available.

Electrolux directors say a split has the potential to create substantial shareholder value over time, given that the two businesses have different end markets, customers and success drivers.

They argue that a split will enable both companies to focus on their respective opportunities to drive profitable growth, with distinct strategies for innovation and customer focus, as well as a high level of capital efficiency. The separation costs are expected to be “relatively low”, they claimed.

Staffan Bohman, chairman of the board of directors of AB Electrolux, stated: “Electrolux Professional is the only supplier in the professional appliances space with a full and integrated offer of solutions under one brand. As such, it has significant potential for long-term value creation as an agile stand-alone company, which can pursue growth through market consolidation and innovation.

“Electrolux believes its core consumer business also stands to benefit both in terms of growth and margins from a sharpened focus on consumer experience innovation, the aftermarket and emerging markets. Electrolux financial targets will remain unchanged following a separation of Electrolux Professional.”

Having initiated the preparations, the board intends to present a proposal for the distribution and listing of Electrolux Professional to a shareholders meeting.

If the shareholders decide in favour of such a proposal, AB Electrolux shareholders will receive shares in Electrolux Professional in proportion to their shareholding in AB Electrolux.

The intention is to list Electrolux Professional on Nasdaq Stockholm during the first half of 2020.

An update on the preparations and a more detailed time plan are expected around mid-year 2019.

Tags : ElectroluxElectrolux Professional
Andrew Seymour

The author Andrew Seymour

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