This month (March 8), leading white goods manufacturer Whirlpool initiated a lawsuit in the United States District Court for the Southern District of New York against Japanese company Nidec over an alleged “breach of its obligations” in the Share Purchase Agreement (‘SPA’) of Embraco.
Nidec is required under the SPA, or sales agreement used to transfer and assign ownership (shares of stock) to a corporation, to obtain antitrust approval of the Embraco acquisition within a year on from announcing the acquisition (April 24, 2019). The acquisition permits the SPA to close six months after this deadline.
The transaction, according to S&P Global, has antitrust authorisation from regulators in the U.S., Brazil and China but has hit speed bumps in Europe.
In November 2018, the European Commission announced an “in-depth investigation” into the deal on the grounds that it could create an unfair marketplace for light-commercial compressors.
“This industry is already highly concentrated, therefore the Commission will closely analyse the impact on competition of Nidec’s proposed acquisition of Embraco, to ensure their customers and final consumers are not harmed due to higher prices or less choice,” EU Competition Commissioner Margrethe Vestager commented at the time.
The Commission has until 20 May 2019 to decide what to do. It has previously required companies to divest some of their portfolios, approved sales with no changes, or split companies up.
Nidec has disputed the Whirlpool claims in the US complaint. The Japanese manufacturer “believes the claims to be without merit and intends to vigorously defend the action,” it said in a statement on March 12 2019. “In the meantime, Nidec remains focused on completing the transactions contemplated by the SPA and believes it is doing all things necessary, proper or advisable to obtain the required antitrust approvals by April 24, 2019.”
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