Sunil Mittal’s family office has ended discussions to acquire a 49% stake in Haier Appliances (India). The talks were called off due to a major valuation mismatch between what Haier’s parent group was asking for, and what Mittal’s group, together with private equity partner Warburg Pincus, was willing to offer.
Haier’s group wanted an estimated valuation of US$2 billion (around ₹17,000–₹17,650 crore), while the highest bid received was far lower—about US$600 million (roughly ₹5,280–₹5,300 crore).
Key Details
- The deal contemplated a combined investment by Mittal’s family office and Warburg Pincus for 49% of Haier India. Haier parent would retain the rest.
- One factor dragging down valuation was brand usage fees and royalty demands from the Chinese parent, which reduced the attractiveness of bids.
- Haier Appliances India has performed well in recent years: net sales grew from ₹5,429 crore to about ₹6,305 crore in calendar year 2023, and profit turned positive (≈ ₹155 crore) after losses the previous year.
Why the Deal Fell Apart
- Valuation Gap: Haier’s asking price was significantly higher than bids made. The mismatch was too large to bridge.
- Royalty and Fee Structure: The obligation to pay high brand‐usage fees and royalties to Haier’s Chinese parent reduced net value in the bidders’ view.
- Market Conditions: It appears that bidders were offering what they believed was reasonable under current market conditions, but Haier’s expectations were more optimistic.
What’s Next for Haier India
- Haier may now explore other potential investors or group of investor bidders.
- Alternatively, Haier Appliances India might consider an Initial Public Offering (IPO) to enable exit or partial exit for the parent company.
- The company continues to hold meaningful market presence, especially in refrigerators (≈14% share), while in other product lines like ACs, TVs, etc., its share is still in single digits. Business Standard
Implications
- This outcome underscores the difficulty in valuing manufacturing and consumer durable companies in India, especially where licensing, brand fees, royalty obligations reduce projected returns.
- For investors, the failed deal may signal caution about entering high valuation expectations versus realistic cost burdens.
- For Haier’s parent company, an IPO might be more appealing now to unlock value rather than waiting for private deals.
