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Whirlpool (WHR; Baa2/BBB-/BBB Neg) Follow up on potential bid from Robert Bosch (NR/A/A)

CONSUMER CYCLICALS
  • Reminder Whirlpool curve is hugging the RBOSGR lines after acquisition rumours (longs targeting composite rating uplift).
  • Reuters on the 26th of June cited "three people familiar with the matter" and that reasoning was to boost its position in household appliances market. It added making an offer was not certain yet.
  • HVAC solutions acquisition for $8b from Johnson controls this morning is sizeable amount of RBOSGR net/gross cash position of €5.3b/€7.4b at the end of last year; unclear how much firepower it sees itself left with.
  • Positive for WHR longs; HVAC is not in the same vertical falling under Energy and Building Technology business sector for Bosch. Adding onto that WHR is light on HVAC products so seems to have been different strategies (if true).
  • WHR 2Q results come tomorrow after the US close, its forecasted to be a rough year for the co (c-14% on sales and EBIT -11%).

WHR equities are holding +20% since, €28s and €27s -20bps and 5Y $CDS -40bps. We will need to wait for US open to see if equities reprices. Original trigger (26th June) here.

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