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Published in Manufacturing
InSinkErator’s food waste disposer. InSinkErator’s food waste disposer. COURTESY PHOTO

Whirlpool acquires InSinkErator in $3B all-cash deal

BY Monday, August 08, 2022 11:41am

BENTON HARBOR — Global appliance manufacturer Whirlpool Corp. has acquired a leading manufacturer of food waste disposers and instant hot water dispensers for $3 billion.

In the all-cash deal, Benton Harbor-based Whirlpool (NYSE: WHR) has entered into a definitiative purchase agreement to acquire the InSinkErator business, based in Mount Pleasant, Wis., from parent company Emerson Electric Co. (NYSE: EMR) of St. Louis, Mo.

“We are excited for the unique opportunity to add InSinkErator to our portfolio of leading brands,” Whirlpool Chairperson and CEO Marc Bitzer said in a statement. “The acquisition is a clear accelerator of our ongoing portfolio transformation and aligned with our stated goals of investing in high-growth and high-margin businesses and Win Americas. … We look forward to capitalizing on the significant growth opportunities we see for this business.”

Founded in 1938, InSinkErator maintains a more than 70-percent share of the food waste disposal industry, serving both home and commercial users. Emerson Electric acquired the business in 1968. InSinkErator employs nearly 1,400 people. 

The InSinkErator business expects to generate sales of about $650 million, with more than $170 million in earnings before interest, taxes, depreciation and amortization (EBITDA) for the fiscal year ending on Sept. 30, 2022. 

Whirlpool’s purchase marks a 18.1-times EBITDA multiple, according to Emerson Electric, which is selling the business to focus on a “higher growth, more diversified and cohesive portfolio.” 

After the deal closes, InSinkErator would operate as a separate business under Whirlpool’s North America region and maintain its Wisconsin headquarters.

Meanwhile, the acquisition would immediately increase Whirlpool’s margins, adding about $1.25 in earnings per share for the 2023 fiscal year, according to company executives.

The deal, which is expected to close in the fourth quarter of 2022, has been approved by both companies’ boards of directors and is subject to regulatory approvals. Whirlpool plans to fund the acquisition through available liquidity as well as new debt at a later date.

New York City-based Greenhill & Co. LLC served as financial adviser and Wachtell, Lipton, Rosen & Katz LLP served as legal counsel to Whirlpool.

In its second quarter earnings call last month, Whirlpool reported a 4.3-percent drop in sales driven by supply chain disruptions and demand slow downs, while posting a $368 million net loss related to the sale of its Russia operations amid the ongoing conflict with Ukraine. 

The company, which ended the second quarter with $1.64 billion in cash on its balance sheet, expects full-year 2022 revenues to drop about 6 percent to $20.7 billion.

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