Bosch Sells Brazil......But Why? EXCLUSIVE + UPDATED 2
Submitted by advisor on Fri, 07/10/2009 - 2:16pm.
Bosch sold its Brazillian appliance unit to Mexican appliance juggernaut Mabe effective July 1. Bosch's Brazil unit was started 15 years ago and includes one factory producing ranges and one producing refrigerators, plus a logistics center, and a sales and service network. Bosch employed 1500 people and had a 9% market share. The sale includes all these assets, the "Continental" brand, the use of the "Bosch" brand for a transition period, and continued sourcing from Bosch for a transition period.
Brazil has the 9th largest economy in the world at $2 trillion. Just ahead of Italy and California and just behind France. Why would Bosch sell Brazil, yet keep all the rest of South America? It sold to its largest competitor in South America, a company that will use these additional sales to further pressure Bosch's remaining markets.
We have attempted to seek comment from both BSH's U.S. and German offices. Without luck.
Our opinion: Bosch needs cash. A lot of cash. So much cash, that they were forced to sell one of the world's fastest rising markets just to raise it.
Reuters Story
UPDATED July 13: Our sources indicate that the Brazillian market has been a thorn in Bosch's side for years. Unprofitable, difficult to manage, and marked by the occassional malfeasance, etc.
Does this circumstantial testimony convince us that Bosch simply gave up? No.
Did Bosch come to the conclusion that Bolivia and Peru were the real places to find hot South American action? Probably not.
What was the factor driving BSH to unload an economy on a trajectory from 9th largest to 5th or 6th largest? We think they needed the money to cover all their bleeding in the rest of the world. It is the only answer which makes sense to us.
Final complaint: What's with all the printing of press releases in Reuters, and other news outlets? Just try to find deeper analysis of what gives south of the equator. If you can find any analysis other than our own on this huge decision please send it in so we might link it here.
UPDATED July 17: Confirming a reader comment below. Standard and Poor report that the Mabe acquisition of BSH Brazil was valued at US$35 million.
See S&P Report Summary: Controladora Mabe S.A. de C.V. Rating Unaffected By Announced Brazil Acquisition Deal
Mabe's controlling stock
Mabe's controlling stock holder is GE......the plot thickens
$35M Question
Press articles in Latin America (en espanol) are reporting the deal was for $35M. Did BSH need cash that badly? Or was it a fire-house sale? Or maybe they just want to focus on Europe - where WP and Electrolux continue to dominate.
No Good Deals
No one is overpaying except maybe the Chinese.That price must have made sense to someone familar with deals in that range.
Contacting BSH
Advisor .... regarding your attempt to contact BSH at both their US and German offices, the last time I checked the US offices were German. Call Huntington Beach again, but try it in Deutsch.
Bosch out of Brazil
It is interesting that they would do that for the reasons that the advisor mentions as well as the fact that the current head of BSH in North America was most recently the head of BSH in Brazil. Maybe just a coincidence, but maybe he is here to position their operations up here for a sale?? I doubt it, but who knows today?As to BSH needing money, what company doesn't today? Well, maybe only the Appliance Advisor doesn't need any......
Well
In this day of everything being complicated because we all make it that way, it must have made sense to both parties and I certainly will not dwell on it.
Money
We are a proud people of course, but we are never rude when we receive gifts. Just try us.