Bosch will sell Russian factories to Turkish investment fund Can Holding

As Kommersant has learned, the Russian division of Bosch has fired the remaining sales managers for household appliances and is negotiating the sale of the business to the Turkish investment fund Can Holding. The Chinese Hisense pulled out of the negotiations because the Turkish company offered more money, Kommersant’s sources say, without naming the amount. Market participants believe that the new owner will launch at Bosh facilities in the Russian Federation not only the production of equipment under its own brands, but also contract production for third-party brands. In their opinion, the final buyer was chosen due to the wary attitude of European manufacturers towards Chinese players and technological proximity to Turkish ones.

The German manufacturer of household appliances Bosch is in the final stage of selling its factories in Strelna near St. Petersburg, the founder of the manufacturer of household appliances Jacky’s, Guseyn Imanov, told Kommersant. According to him, the Chinese Hisense pulled out of the negotiations because the Turkish investment fund Can Holding “offered twice as much.” Mr. Imanov added that Bosch fired the 30 managers remaining in the Russian Federation who were involved in selling equipment to Russian retailers. They also “partially supervised parallel deliveries,” says one of Kommersant’s sources. “Bosch consistently left the Russian market, fulfilling its obligations for service support and to employees; before their dismissal, they were given an annual salary,” adds another Kommersant source in the market.

In the summer it became known that the main contender for the Bosch factories in Strelna was the Chinese Hisense, but the details were not disclosed (see Kommersant on June 20). A year ago, interlocutors estimated capacity at 3.8–4.4 billion rubles. (see “Kommersant” dated August 22, 2022). From the information on the company’s website it follows that at the end of the 2019 financial year, Bosch’s turnover in Russia amounted to €1.18 million. BSH Household Appliances LLC has been operating in the country since 1994, producing more than 1 million refrigerators and washing machines per year and organizing service for brands Bosch, Siemens, Gaggenau and Neff.

A Kommersant source familiar with the progress of the negotiations clarifies that Can Holding plans to begin production of refrigerators, washing machines and built-in appliances in the Russian Federation under its own brands (Awox, Seikon, Telefox and Energia and others), as well as provide capacity as contract production to other vendors. According to Kommersant’s interlocutor, the terms of the deal do not imply a buyback.

Two more Kommersant sources in the household appliances market told Kommersant that Can Holding is “at the final stage of the transaction.” According to one of them, Bosch “was ready to part with the plant for $20 million, but the fund offered even more,” the deal is being approved by the FAS. “Exactly how Can Holding plans to use Bosch factories is unclear, given that the equipment there is worn out and is not intended for equipment from another vendor,” says Kommersant’s interlocutor. According to his version, the transaction may be a “fictitious sale of property.”

Hisense declined to comment. BSH Household Appliances LLC, FAS and Can Holding did not respond to Kommersant’s request.

Hisense could have been offered less favorable conditions than for Turkish investors, since German manufacturers are “trying in every possible way to protect Chinese competitors from their technologies,” said a representative of the supplier of household appliances Marvel Distribution. “The attitude towards Turkish producers in Europe is still different. Also, Turkish factories are technologically closer to German ones, and they can more fully use Bosch’s developments to produce their products,” he believes.

After the outbreak of hostilities in Ukraine, another Turkish manufacturer of household appliances, Archelik, bought three factories in Lipetsk from the American Whirlpool. At that time, the value of Russian business was estimated at €20 million.

If Can Holding manages to launch contract production of household appliances with Bosch quality, then many Russian brands would be interested in these production facilities, including Dmitry Shashkin, CEO of the Kuppersberg household appliances brand. In his opinion, there are currently not enough quality factories for contract manufacturing in the Russian Federation.

Timofey Kornev