Amsterdam, the Netherlands and Chennai, India – Royal Philips Electronics (AEX: PHI, NYSE: PHG) announced today that it has agreed to acquire the assets of the Preethi business, a leading kitchen appliances company in India. This will make Philips the clear leader in this specific fast-growing segment within the Indian Domestic Appliances market. Financial details of the transaction were not disclosed.
With almost 40 percent of Philips Consumer Lifestyle sector’s sales already derived from emerging markets, the acquisition of Preethi demonstrates Philips’ commitment to drive local innovation, including further building its industrial and commercial footprint in emerging markets.
“To capture growth in kitchen appliances we need to intimately understand local consumer needs and deliver the right solutions,” said Pieter Nota, Chief Executive Officer of Philips Consumer Lifestyle. “By building on Preethi’s unique local knowledge, heritage of quality, and substantial distributor and dealer network, we are well positioned to drive growth in one of the world’s most dynamic kitchen appliance markets.”
Preethi, founded in 1978, is headquartered in Chennai, India and employs approximately 850 people. The company manufactures a wide range of kitchen appliances tailored to the needs of Indian consumers. With an extensive network of consumer care centers, distributors and dealers, Preethi has a substantial presence across India, with particular strength in the south of the country.
For several years the company has seen double digit revenue growth in its business. Demand for its products is expected to continue to rise due to the rapidly expanding Indian middle class, which is projected to grow more than tenfold to over 580 million people from 2007 to 20251.
“Since launching our first products over 30 years ago, Preethi has grown into one of the most successful and trusted kitchen appliance brands in India,” said TT Varadarajan, Chairman and Managing Director of Preethi. “Now we have an even brighter future with Philips. The combined strength of our two organizations will benefit both our customers and employees.” Mr. Varadarajan will continue to spearhead the Preethi business within Philips.
Upon closing of this transaction in the second quarter of 2011, which is subject to certain contractual and other conditions such as regulatory approval, Preethi will become part of the Domestic Appliances business group within Philips’ Consumer Lifestyle sector. It will be led out of the business group’s newly established global headquarters in Shanghai, headed by Murali Sivaraman, former CEO of Philips India.
1 Mckinsey Global Institute projections