Written by Anirban Sen and Emma Victoria Farr
(Reuters) – German engineering group Robert Bosch is considering a bid for U.S. home appliance maker Whirlpool (NYSE:), a move that would strengthen its position in the home appliance market, three people familiar with the matter said.
One of the sources said that Bush is in talks with potential advisers about the possibility of submitting an offer to buy Whirlpool, which has a market value of about $4.8 billion.
The sources said that it is not certain that the offer will be made, and requested anonymity because the matter is confidential.
Spokesmen for Bosch and Whirlpool said the two companies do not comment on “market rumours.” Shares of the American company rose 12.7% in early trading after the Reuters report.
Buying one of the world’s largest white goods manufacturers would significantly boost Bosch’s home appliances business at a time of increasing competition from Asian rivals.
Whirlpool has undergone a major restructuring process in recent years, which has seen it merge its European businesses into a new company controlled by its Turkish competitor Arçelik and divest its businesses in the Middle East and Africa.
“A potential acquirer can believe in the possibility of some future recovery with the right multi-year time frame and macro backdrop,” said RBC Capital Markets analyst Michael Dahl.
Whirlpool faces “significant challenges” due to the low spending environment, Dahl added.
The potential acquisition comes as Bosch, the world’s largest auto supplier, looks to takeovers to grow its unit, which makes large home appliances.
A deal for Whirlpool, whose brands include Ariston, Hotpoint, Ignis and Privilege, would be among the biggest deals unveiled for the German industrial group.
Reuters reported in March that Bosch was among industrial companies competing for heating and ventilation assets worth more than $6 billion. Johnson Controls (NYSE:) International in the United States
Bosch CEO Stefan Hartung told German business daily Handelsblatt in May that the company was eyeing a few larger acquisition targets, and that it was not ruling out entering a new line of business or a global deal.
He told reporters earlier in June that the group was open to listing some of its divisions on the stock market while exploring financing options for deals. He did not mention any sections.
Whirlpool, a household name known for its large appliances such as washing machines and refrigerators, has in recent years aimed to grow its customer base by expanding into smaller appliances such as espresso machines and other kitchen appliances as it faces slowing growth.
The Michigan-based company recently said it would cut about 1,000 jobs in an effort to boost profit margins.
Longbow Research analyst David McGregor believes Whirlpool may support the bid at the right price.
Whirlpool has lost nearly 50% of its market value over the past two years. Shares of its Swedish competitor Electrolux fell by 35% in the same period.
Electrolux shares rose after the report, trading up about 4.5% by 1040 GMT.