Walton buys 3 European brands to make 4.8m compressors a year

Walton became the first company to start manufacturing refrigerators and freezers in the country in 2008 by importing compressors from the famous Italian brand Acc and now the Bangladeshi electronics giant has bought the compressor brand itself.

In its journey for more than a decade now, Walton has secured the top position in the country's refrigerator market. Since setting up its first compressor manufacturing plant in 2017, the company has been exporting refrigerators to various countries including America, Russia, and those in the Middle East.

With the procurement of the more than 50-year-old ACC compressor brand, Walton is now on course to gain a major foothold in European countries.

The agreement for the sale of the machinery, trademarks, and patents of the compressor built for 50 years in ACC that goes to the Walton group in Bangladesh was signed on Friday in the municipality of Mel, Italy.

With this agreement, around thirty ACC workers will be engaged between now and the end of the year in the disassembly and assembly of machinery in Bangladesh and will also be there to accompany the workers in the first uses of the line, says a report published in an online news outlet, Breaking Latest News.

In its price-sensitive information provided to the Dhaka Stock Exchange (DSE) on Wednesday, Walton Hi-Tech Industries PLC announced the purchase of two more brands – Zanussi Elettromeccanica (ZEM) and Verdichter (VOE) – from Italia Wanbao-ACC.

Walton said it managed to procure the three European brands by winning a tender. The board of directors has unanimously approved the procurement move.

Infographic: TBS

An official of Walton said Italia Wanbao-ACC has sold its compressor unit to Walton in an open tender. The deal will be completed within the next three months. The Italian company has been operating for the last 50 years and has business in 57 countries, he added.

It will also buy a fully automated inverter and non-inverter compatible compressor line with a capacity of 3.2 million units per year, said the company, adding that subsequently, Walton will expand its compressor production capacity to 4.8 million per year, which will result in establishing a significant market share in Europe and other markets around the globe.

For continued operation, the board has also decided to open a subsidiary company, branch office or liaison office in Europe and the US.

This is the first time in the country's history that a local electronic products manufacturer has bought a foreign brand.

Walton, in its regulatory filing on the DSE, however, has not mentioned the amount of investment needed to buy the three global brands.

But sources have told The Business Standard that Walton would have to invest around Tk700 crore to build a local facility similar to that of the Italian compressor manufacturer. And when the values of the three European brands, the compressor technology, patents, and registrations in the 57 European countries are taken into account, the deal should stand at over Tk1,000 crore for sure, they added.

As the new owner of the decades-old European brands, Walton would carry them forward in the international market. Also, Walton may introduce local market products under the brands.

Nevertheless, Walton will soon start to produce compressors and refrigerators under the Acc brand at its existing factories in the country, officials at the company told TBS, adding the manufacturing of the remaining two brands will also start gradually.

Abul Bashar Howlader, Additional Managing Director of Walton Hi-Tech, told TBS that the overseas asset procurement is a significant step towards reaching Walton's vision to be among the top five global brands by 2030.

He, however, declined to disclose the procurement value citing procedural limitations.

Italia Wanbao-ACC is a state-owned one in Italy and the owner preferred Walton not only because of money, but also because of its respect for Walton as the new owner of their hi-tech compressor unit, said the Walton AMD.

ACC Compressors was a historical company located in the Belluno area, founded in 1968 and a leader in household appliances compressor production.

Despite having technological strength, reputation, and a good market share, the unit had been suffering from some problems mainly because of being a state-run one.

In 2014, it was taken over by the Chinese multinational "Wanbao Group Compressor Co Ltd', which is controlled by the Chinese municipality of Guangzhou, which came to an agreement with the Italian Government to keep the Belluno site in operation, committing itself to make investments.

Italy's Ministry of Economic Development awarded the international tender for the sale of the Wanbao-ACC production lines to Walton Group, which has started to have a turnover of 1 billion dollars and 30,000 employees.

ACC Extraordinary Commissioner Maurizio Castro and Walton Group CEO Golam Murshed signed the sales agreement that allows the Bangladeshi home appliance maker to acquire machinery, trademarks, and patents of the compressor brands built for 50 years.

At the signing of the agreement at the headquarters of the Municipality of Borgo Valbelluna on 1 April, Maurizio Castro termed Walton a "Samsung of the future," according to Breaking Latest News.

With this agreement, the Italian company will pay off all debts by delivering a debt-free plant to the new buyer.

"Walton's offer also allows us to collect what is needed to repay the debt to some workers, for about 2 million, and also to respect the promise made to industrial suppliers, especially those in the area, so as not to leave them behind," Castro said. 

The sell-off will enable Walton to find the ACC-signed "K compressor" in future productions, explained the Italian company commissioner. Besides, some 30 ACC employees will be re-employed in Walton for the disassembly and reassembly of the lines and subsequent training in Bangladesh.

Walton's CEO highlighted how they will grow and develop these brands by reviving them. "This is how a family is created between Italy and Bangladesh".

Earlier in February, an Italian company LU-VE Group, offered to buy the Italy branch of Wanbao-ACC with a total investment forecast of about €6m.

But the employees did not support the deal as the potential buyer would have dismantled the old production lines, explained Castro.

In Europe, approximately 27 million refrigerators are manufactured; the main manufacturing countries are Turkey and Russia, whereas Italy occupies the 6th place with 1.7 million pieces. 

China accounts for 72% of the European compressor market. Of the 28 million compressors required annually for domestic refrigerators, 14% come from other Asian countries and only 2% from within Europe as most local companies prefer to source products from outside due to lower cost, according to an industry review made by Wanbao-ACC itself in 2021.

Walton as the first company in the country, eighth in Asia, and 15th in the world started manufacturing compressors on 6 April 2017.

The company has set up a state-of-the-art compressor manufacturing plant at Walton Hi-Tech Industries Limited in Chandra, Gazipur.

The factory is currently producing compressors for air conditioners and refrigerators.

At present, the electronics giant controls over 60% of the domestic electronics home appliance market. Occupying over two-thirds of the local refrigerator market, around half of the television, and one-third of the air conditioner markets, the company currently exports home electronics products to around 40 countries.

In 2020, Walton Hi-Tech Industries Ltd got listed on the stock market. Currently, each share of the company is being traded at Tk1,078 on the DSE.