LJUBLJANA Japanese consumer electronics firm Panasonic Corp will buy up to 13 percent of Gorenje, one of the biggest household appliance makers in Eastern Europe, as it aims to tap growing demand in the region.
Panasonic is pulling away from unprofitable consumer electronics and wants to be number one in appliances, pitting the company against the likes of Whirlpool Corp and Electrolux. It also wants to tap into growing demand in emerging markets in Europe, particularly Russia.
The maker of Viera televisions will pay 10 million euros ($12.91 million) for the stake in Gorenje, which manufactures energy efficient appliances under multiple brand names. It sells to 90 countries and exports 95 percent of its output.
The companies will engage in joint research and development for washing machines, refrigerators and built-in ovens and cooperate in sales and marketing throughout Europe.
"Panasonic obliges itself to not increase its stake in Gorenje to above 13 percent for the period of 5 years without a preceding written approval of Gorenje's management and supervisory board," Gorenje said in a statement.
Panasonic will buy Gorenje shares at a price of 4.31 euros each while the exact size of the stake bought will depend upon a rise in share capital to be carried out at the same price by current Gorenje shareholders in the coming months.
Gorenje, the small euro zone member's second largest exporter with a market share of about 4 percent in Europe and market capitalization of 66 million euros, is considering listing its shares on the Warsaw bourse alongside its current listing in Ljubljana.
"By combining our complementary product and manufacturing technologies, sales channels and marketing expertise, we look forward to bringing advanced, smart and ecologically responsible appliances to consumers across Europe, including Russia, in the coming years," said Laurent Abadie, head of Panasonic Europe.
Gorenje expects the alliance with Panasonic to increase its annual sales by 80 million euros per year by 2018 from sales of 1.26 billion euros in 2012.
It had a group net loss of 4.2 million euros in the first quarter of 2013.
Shares in the company rose by 4.55 percent to 4.34 euros by 1000 GMT on Friday, while the blue-chip SBI index gained 0.52 percent.
($1 = 0.7744 euros)
(Reporting by Marja Novak; Editing by Elaine Hardcastle)