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Business deals

Nidec accelerates M&A with $1bn purchase of Whirlpool unit

Motors king Nagamori racks up acquisitions before successor steps forward

Nidec Chairman Shigenobu Nagamori, right, announces the Embraco purchase from Whirlpool with Executive Vice President Hiroyuki Yoshimoto, his chosen successor. (Photo by Hiromasa Matsuura)

OSAKA -- Nidec continues making aggressive acquisitions overseas as founding Chairman Shigenobu Nagamori realigns the motor manufacturer's operations while he prepares to cede control to his young successor.

The Kyoto-based company said Tuesday it will buy the Embraco compressor business of U.S. appliance maker Whirlpool for $1.08 billion. The deal represents Nidec's second-largest acquisition yet, after the $1.2 billion purchase of Emerson Electric's motors, drives and electric power generation businesses last year.

"We cannot sustain growth without continually changing the business structure," Nagamori, who also serves as CEO, told reporters here.

The 73-year-old leader was joined by Executive Vice President Hiroyuki Yoshimoto, whom Nagamori picked as his successor. Yoshimoto, 50, takes the post of president on June 20.

The two are working together like "partners in a three-legged race," as the CEO recently described the relationship, with Nagamori providing the direction on acquisitions and Yoshimoto following up to ensure the businesses are on a growth track.

Nidec has been shifting focus from hard disk drives to home appliances, automobiles and robot parts. Such operations now produce a larger share of Nidec's sales, but Nagamori apparently remains unsatisfied, as indicated by the recent large acquisitions.

Stronger environmental regulations on white goods in Europe, the U.S. and China are expected to fuel demand for energy-saving products. Combining Nidec's energy-saving motors with Embraco's compressors for refrigerators would make a more attractive product. The Japanese company last year bought another maker of refrigerator parts, Germany's Secop.

Nidec intends to devote 500 billion yen ($4.62 billion) to capital investment over three years, Nagamori told reporters. The automotive business -- including motors used in the drive system of electric vehicles -- will receive 200 billion yen of that total, with 120 billion yen earmarked for reducers used in robots and 100 billion yen for energy-saving motors used in appliances.

Nagamori has always kept his antenna raised about companies around the world. When he believed his cost-cutting and other know-how would improve the efficiency of a given business, he went ahead with the purchase and rebuilt the business. Embraco marks Nidec's 58th acquisition.

The CEO has said Nidec will increase its sales to between 4 trillion yen and 5 trillion yen through acquisitions. But as these deals increase and their respective sizes grow, the company assumes more risks based on the difficulty of integrating the new acquisition with the group's overall operations. One issue involves securing needed personnel such as engineers and managers.

Nidec expects a roughly 10% increase in net profit to 145 billion yen for the current fiscal year on sales of 1.57 trillion yen, a 6% rise. The profit and sales projections both represent a fifth straight record. Strong sales likely will continue for advanced motors amid demand for energy-saving home appliances and the wave of automobile electrification. The company plans to increase its annual dividend to 100 yen per share, up by 5 yen from last fiscal year.

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