Target Information

Electrolux Professional Group, a leading player in the global professional laundry market, has recently acquired TOSEI, a Japanese company recognized for its innovative offerings in both laundry and food & beverage segments. With an estimated position as the second-largest company in the resilient global professional laundry industry, Electrolux Professional has significantly enhanced its presence in multi-housing, coin-operated, and care segments through this strategic acquisition. The addition of TOSEI aligns seamlessly with the Group’s commitment to sustainability and digitalization, establishing a more balanced geographical footprint in Asia.

TOSEI holds a promising position in Japan, particularly in the laundry sector, where it had previously been a minor player for Electrolux Professional. The acquisition is set to bolster the Group's market share, particularly as TOSEI leads in vacuum packing technology, a crucial aspect of the food and beverage market. As Electrolux aims to exploit TOSEI's stronghold in vacuum packing, it anticipates future growth opportunities, both within Japan and in expanding regions.

Industry Overview

The professional laundry and food & beverage industries in Japan are currently experiencing transformations due to heightened consumer expectations for quality and sustainability. The global professional laundry market is resilient and continuously evolving, driven by increasing demand for efficient laundry solutions in both commercial and residential settings.

Japan is recognized for its advanced technology and innovation, particularly in the food and beverage sector, where automation and eco-friendly products are becoming prevalent. Notably, market players are investing in sustainable practices, shedding light on production efficiency and energy conservation, thus aligning with global industry trends towards environmental responsibility.

In recent years, the laundry market in Japan has faced challenges, including rising input costs and a fluctuating economy. However, as economic conditions normalize, and consumer inclination towards premium services increases, the market is poised for recovery. Electrolux’s acquisition of TOSEI strategically positions the Group to capture growth in various segments while addressing these market shifts.

Further, the Japanese market is recognized for its significant share of industrial and commercial laundry services, which require high-performance equipment and reliable service support. This demand signifies a golden opportunity for Electrolux Professional to leverage TOSEI’s established customer base and enhance service delivery in the region.

Rationale Behind the Deal

The acquisition of TOSEI is fundamentally driven by Electrolux Professional's ambition to strengthen its positioning within the competitive landscape of Japan’s professional laundry and food & beverage markets. By acquiring TOSEI, Electrolux can expand its product line and leverage synergies that come from combining its existing offerings with TOSEI’s specialized solutions.

This strategic move is expected to enhance profitability by facilitating operational efficiencies, improving market access, and better aligning with consumer preferences for sustainable and innovative products. The anticipated growth stemming from TOSEI’s established market presence in vacuum packing also aligns with Electrolux’s broader goal of establishing itself as a leader in sustainable practices within the food & beverage sector.

Investor Information

Electrolux Professional, led by CEO Alberto Zanata, is a well-established organization with a strong market presence and a strategic vision focused on achieving financial robustness and geographical diversity. The Group illustrates dynamic growth potential, demonstrated through its recent acquisitions in the United States and Japan, which enrich its operational capabilities and market reach.

With a commitment to digitalization and sustainability, Electrolux Professional is keen on capturing market trends while navigating macroeconomic challenges. This focus not only positions the organization for immediate growth but also fosters a long-term strategic framework aligned with customers’ evolving needs and market expectations.

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The acquisition of TOSEI presents a valuable investment opportunity for Electrolux Professional, reinforcing its strategic foothold in a critical market. By broadening its service capabilities and enhancing product offerings, Electrolux can leverage the strength of TOSEI to establish a competitive advantage in Japan's laundry and food & beverage sector.

Furthermore, the anticipated recovery of the Japanese economy, combined with the normalization of inflationary pressures, creates a conducive environment for growth. As Electrolux integrates TOSEI’s innovative solutions into its operational framework, the Group stands to benefit substantially from enhanced productivity and profit margins.

However, while the integration process may incur initial costs, such as the specified SEK -15m in integration expenditures and SEK -30m in inventory adjustments, the long-term benefits outweigh these transitional impacts. The expected recovery of TOSEI’s EBITA-margin is a promising indicator that underscores the viability of this deal.

In conclusion, Electrolux Professional’s acquisition of TOSEI is likely to be a prudent investment, positioning the Group well to realize substantial growth and sustainability-driven improvements within Japan’s competitive laundry and food & beverage markets.

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