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    Electrolux The Acquisition & Integration of Zanussi

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    mittal_alok2006
    Electrolux acquired Zanussi, an Italian appliance manufacturer, in an effort to expand its product lines and European presence. Zanussi was struggling financially and lacked resources for research and development. After negotiating the acquisition, Electrolux worked to integrate Zanussi and resolve issues around workforce reductions, commitments, and financial structure. The acquisition of Zanussi strengthened Electrolux's position in household appliances across Europe.

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    Electrolux The Acquisition & Integration of Zanussi

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    mittal_alok2006
    396 views17 pages
    Electrolux acquired Zanussi, an Italian appliance manufacturer, in an effort to expand its product lines and European presence. Zanussi was struggling financially and lacked resources for research and development. After negotiating the acquisition, Electrolux worked to integrate Zanussi and resolve issues around workforce reductions, commitments, and financial structure. The acquisition of Zanussi strengthened Electrolux's position in household appliances across Europe.

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    Electrolux acquired Zanussi, an Italian appliance manufacturer, in an effort to expand its product lines and European presence. Zanussi was struggling financially and lacked resources for research and development. After negotiating the acquisition, Electrolux worked to integrate Zanussi and resolve issues around workforce reductions, commitments, and financial structure. The acquisition of Zanussi strengthened Electrolux's position in household appliances across Europe.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    396 views17 pages

    Electrolux The Acquisition & Integration of Zanussi

    Uploaded by

    mittal_alok2006
    Electrolux acquired Zanussi, an Italian appliance manufacturer, in an effort to expand its product lines and European presence. Zanussi was struggling financially and lacked resources for research and development. After negotiating the acquisition, Electrolux worked to integrate Zanussi and resolve issues around workforce reductions, commitments, and financial structure. The acquisition of Zanussi strengthened Electrolux's position in household appliances across Europe.

    Copyright:

    Attribution Non-Commercial (BY-NC)
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    Download as ppt, pdf, or txt
    of 17

    Electrolux – the acquisition

    and integration of Zanussi


    Tushar Narula
    MBA(IB),2nd semester
    D-67
    Problems of Electrolux !!
     Declining profit in 1962
     Absence of research & development
    capability.
     Inefficient in compare to competitors
     Limited product line
     The core business was made up vacuum
    cleaner & absorb – refrigerators .
     Electrolux has an aggressive expansion strategy
    through acquisition.
     At beginning it concentrated acquiring firms at its
    traditional market.
     Subsequent acquisitions served not only to
    srengthen the company’s position in household
    appliances activities but also broaden its
    European presence.
     From 1970s to 1988 it made capital gain of more
    than SEK 2.5 billion from selling off idle assets .
    Growth at Electrolux through
    acquisition
     Sale of electro helios to electrolux.
     Electro helios was technological leader I
    compressors type refrigerators.
     This lead to major expansion of electrolux’s
    role in swedish household appliances market.
     Through acquisitions electrolux become the
    world largest manufacturer of household
    appliances from a small & marginal player.
    Contd…

     By developing the product line


    through acquisition and in house
    development , Electrolux emerged as
    one of the world’s leading chain –saw
    manufacturers with about 30% of
    the global market.
    Points keep in mind before
    acquisition of a company
     “you never choose an acquisition
    ;opportunities just come”
     The financial aspect of the project were
    considered to be very important.
     The company usually ensured that it paid
    less for a company than total assets
    value.
     No standard method for treating
    acquisition
    ABOUT ZANUSSI
     Started in 1916, small workshop in
    Pordenone in Northeast Italy
     It was 2nd largest privately-owned
    company in Italy
     It had 30,000 employees, 50 factories &
    13 foreign sales companies
     Branch Office is in Paris & was opened in
    1962
     1st foreign manufacturing subsidiary is
    IBELSA, set up in Madrid in 1965
    Actions taken after acquiring a
    company
     It identify the key action areas and
    created task force consisting of
    managers from both electrolux and the
    acquiring company in order to address
    each issues on a time bound basis.

     The top management of the was often


    replaced but the middle management
    was kept intact.
     Product Range includes: Cookers,
    Refrigerators & Washing-Machines

     Company’s misfortune started in 1968,


    when Lino Zanussi & other executives
    died in an Air Crash

     It also carved out a costly programme


    into fields: Color Television, Prefabricated
    Housing, Real Estate & Community
    Centers
    ACQUISITION PROCESS
    ZANUSSI ELECTROLUX

     They were weak during the  They were strong enough


    acquisition process  Well established in
     Zanussi were largest producer Microwave-Ovens,
    of “Wet-Products” like: Cookers& Fridge-Freezers
    Washing-Machines  Had large market share in
     Zanussi was completely Scandinavia & Switzerland
    absent in these areas  Electrolux failed to crack
     Market leader in Italy & Spain these areas
     Strong in France too &
    significant presence in
     They were losing money &
    Germany had limited strength in
     It was a vertically integrated Vacuum Cleaners
    company with substantial  It avoided vertical
    spare capacity for component integration & sourced most
    production of its components
    externally
    RESOLVING ISSUES
     Consortium was organized that included
    prominent Financial Institutions & Industrial
    Companies such as: Mediobanca, IMI, Crediop &
    a subsidiary called Fiat.
     Meeting was held on negotiation process that
    took place in Rome on Nov15,1984
     Document confirming Electrolux’s intention to
    acquire Zanussi was jointly signed by both parties
     Hans Werthn declared: “We are not buying
    companies in order to close them down, but to
    turn them into profitable ventures & we are not
    Vi-kings, who were Norwegians, anyway
    NEGOTIATIONS
    UNDERTAKEN
     From Nov30,1983 until Dec14,1984 was
    when formally negotiation was signed for
    a 12-month period
     Various issues undertaken were:
    1. Union and Work Force Reduction
    2. Prior Commitments of Zanussi
    3. Financial Structure and Ownership
    Income statement for Zanussi
    Group
      1980 1981 1982 1983
    Sales 3826 4327 4415 5240
    operating cost (-)3301 (-)3775 (-)3957 (-)4654
             
    Operating Income Before Depriciation 525 552 458 586
    Deprecation (-)161 (-)98 (-)104 (-)130
             
    Operating Income After Depreciation 364 454 354 456
    Financial Income 192 330 284 279
    Financial expenses (-)407 (-)489 (-)647 (-)627
             
    Income after financial items 149 295 9 18
    extraordinary items (-)53 (-)228 (-)223 81
             
    income before appropriation 96 67 232 189
    Appropriations (-)53 (-)42 (-)409 (-)382
             
    Income befor taxes 43 25 641 193
    taxes (-)7 (-)7 (-)10 (-)10
             
    net income 36 18 (-)651 (-)203
    Balance Sheet
      1980 1981 1982 1983
    Current asets excluding inventory 1559 1987 1811 2108

    Inventory 965 1054 999 656

    Fixed asstes 1622 1539 2366 2902

             

    Total asstes 1416 4580 5176 5966

             

    Current liabilities 1590 1832 1875 2072

    Long term liabilities 1273 1441 1864 2349

    Reserves 259 301 472 627

    Shareholders equity 1024 1006 965 918

             
    Total liabilities and shareholders equity 4146 4580 5176 5966
    MISSION VALUES AND GUIDING
    PRINCIPLE
     MISSION
     TO BECOME MARKET LEADER IN EUROPE.
     TO HOLD A SIGNIFICANT POSITION IN
    OTHER WORLD AREAS.
     TO SATISFY THE CUSTOMER NEEDS.

     VALUES
     TO BE NEAR THE CUSTOMER.
     TO ACCEPT CHALLENGES.
     TO DELIVER TOTAL QUALITY.
    ELECTROLUX COMPONENTS
    GROUP
     Electrolux acquisition of white goods in
    U.S in march 1986
     Limitation in level of finished goods due
    to differences in customer test , technical
    standards and high transportation costs
     To control the competitiveness 50% of
    components was to be made from
    outside parties, 20% of internal
    requirement from inside
    BRAND POSITIONING AND
    PRODUCT DEVELOPEMENT
     Electrolux international expansion was a
    proliferation of brands all over including U.S and
    Europe
     In Europe the chose 4 brand- name families in
    which a particular customer profile to become a
    separate design family
     It involves scale production of standardized product
     Each brand would be localize in its country through
    distribution, positioning, promotion and service

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