Merlion may buy Russian manufacturer of household appliances Kuppersberg

The owners of the Russian manufacturer of household appliances Kuppersberg are negotiating the sale of the business to the distributor Merlion, which is already developing the Digma and Hyundai brands. The decision to sell was made due to diverging views of the co-owners on the development of the company and a decrease in its net profit against the backdrop of rising marketing costs. The transaction amount, according to Kommersant, may amount to 5 billion rubles. Experts believe that teaming up with a large distributor can improve brand awareness. However, there are other contenders for Kuppersberg.

Kommersant’s interlocutor, close to the domestic manufacturer of household appliances under the Kuppersberg brand, said that its owners are negotiating the sale of Merlion (owns the Citylink retailer). This information was confirmed by two sources among other manufacturers of household appliances. According to one of them, two more companies are vying for the asset; Kommersant’s interlocutor did not specify their names. The transaction amount, according to him, could amount to 5 billion rubles.

The decision to sell was made against the background of a conflict between the owners of the company, a Kommersant source claims: “Due to the marketing strategy pursued by one of them, revenue grew, but net profit decreased significantly, which caused dissatisfaction with the other co-owners.” Kuppersberg declined to comment; Merlion did not respond to Kommersant.

Kuppersberg has traditionally only engaged in contract assembly and sale of equipment in the Russian Federation, from which it made a profit, and “one of the co-owners is not ready to change the vector of development,” says a Kommersant source among retailers: “However, other owners want to invest not only in advertising, but also in the development of production in Russia.” Given the conflict of interests, the owners decided that it was better to get out of business, he said.

According to Holodilnik.ru, in January-March 2024, hobs worth 7.9 billion rubles were sold in the Russian Federation, which is 18% more than the same period last year. In first place with 19% is the Chinese Haier, followed by Gorenje with 15.3% of the market (owned by the Chinese Hisense) and the Russian Weisgauff with 5.2%. Over the year, Kuppersberg increased its share in this segment by one percent, to 4% of the market. In the oven segment, Kuppersberg took 2.2% in the first quarter of 2024 (1.9% in 2023). Haier was also in first place with a share of 21.6%, followed by Gorenje (20.3%) and Weisgauff with 4.6%. In total, devices sold amounted to RUB 9.5 billion, which is 15% more than January-March 2023.

“After European manufacturers left the Russian Federation, Kuppersberg strengthened its position in its traditional categories of built-in kitchen appliances,” notes Aleksey Pogudalov, commercial director of Holodilnik.ru. According to him, the brand was initially positioned in the high price segment, competing with Bosch and Electrolux.

Merlion is already actively developing its own electronics brands, such as Digma and Hyundai, emphasizes Kommersant’s source among equipment distributors. The investment in Kuppersberg will allow the company to expand into new segments. In his opinion, the deal will allow Kuppersberg to obtain financing and, accordingly, will accelerate the development of the brand. The production and sale of household appliances, Kommersant’s interlocutor adds, are projects with a long payback, “therefore, at the current Central Bank rates, the strategic decision looks logical, and the transaction amount is realistic.”

Timofey Kornev