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. Last Updated: 07/27/2016

Merloni Completes Purchase Of Stinol

Italian company Merloni Elettrodomestici has completed its acquisition of a 100 percent stake in the Stinol refrigerator factory worth $119.3 million, the companies announced at a news conference Tuesday.

However, the Interros holding, a shareholder in NLMK, issued a press release the same day saying the deal to buy the factory — Russia’s largest refrigerator producer and a subsidiary of the Novolipetsk metals plant, or NLMK — was illegal.

By acquiring Stinol, Merloni will increase its share of the appliance market by 15 percent to 35 percent. Over the next three years, Merloni plans to invest $50 million in production at the factory.

Some $10 million will be invested in Stinol refrigerators next year. Another $15 million will go into a production line for Indesit refrigerators in 2002, and in 2003 Merloni will sink a further $25 million into a Stinol washing-machine production line.

However, Interros said it had applied to the head of the Federal Securities Commission, Igor Kostikov, requesting permission to dispute the issue of additional Stinol shares, which had been done "with the intention of selling the factory … to the Italian company Merloni."

Interros has been struggling for influence at the factory. In May, Interros announced that it controlled 34.19 percent of NLMK shares and wanted to participate in the management of the factory. It was not able to do this, however, as NMLK board chairman Vladimir Lisin’s company Rumelko owns over 60 percent of the shares and has six of the nine seats on the board.

Now, Interros is trying to dispute a deal approved by the NLMK board. "In our opinion, a number of illegal activities were performed in the sale of Stinol, and therefore the deal is invalid," said Interros spokeswoman Larisa Zelkova.

Interros says the Stinol factory was significantly undervalued since the budget, for its construction alone in 1989 to 1993 was $274.5 million. Moreover, the factory is in good condition and is working actively.

"According to all laws for calculating investments, it should have cost more than the amount for which it was sold," said Zelkova.

However, according to Guerra, "Typically the value of the company is equal to half of its annual turnover, which for Stinol was $110 million. We paid more than its annual turnover.

The CIS market is extremely promising, with most Soviet-era appliances soon to reach the end of their life spans, said Merloni general director Andrea Guerra. The appliance market is estimated at 4 million units, with growth potential of 20 percent per year.

Merloni produces 8 million appliances at 13 factories worldwide. The company reported turnover of 1.7 billion euros ($1.42 billion) last year.

The Stinol factory was founded in 1990 by NLMK. According to Merloni, Stinol covers 40 percent of the refrigerator market in Russia, with turnover of $110 million last year. Production is at 700,000 units per year, while total capacity is 1 million units.