Glen Dimplex, the electrical company owned by the Louth-based Naughton family, has agreed to sell its Morphy Richards home appliances brand in a deal believed to be worth between €175 million and €200 million.
The brand is to be bought by stock market-listed Chinese company Guangdong Xinbao Electrical Appliance Holdings (Xinbao), which trades under the brand Donlim. The transaction is subject to Chinese government approval, and it is expected to close by the end of the year, staff at Glen Dimplex were told.
Morphy Richards is a British brand that was acquired by Glen Dimplex founder and industrialist Martin Naughton in the mid-80s. Its toasters, kettles and other home appliances are sold in China, Ireland, the UK, Australia and New Zealand, with worldwide retail sales estimated at more than €350 million.
Xinbao, which already manufactures Morphy Richards products in China for Glen Dimplex, is buying the brand globally, but initially it will take full control only of the Chinese and British operations – Glen Dimplex will keep rights to distribute the brand under licence in Ireland, Australia and New Zealand for “at least” 10 years.
Glen Dimplex staff were told of the deal on Wednesday in an email from Fergal Leamy, the chief executive of the Glen Dimplex group. He said the Irish company decided to sell after it received an approach from the Chinese buyer.
Mr Leamy told staff that he and Fergal Naughton, the executive chairman of Glen Dimplex, had been working with Donlim/Xinbao for two years on a plan to further develop the Morphy Richards brand in China, which is by far its biggest market. As part of that process, the Chinese company then made its approach to buy the Morphy Richards unit outright. “We felt it made sense,” Mr Leamy wrote.
He told staff that Morphy Richards represents “less than 3 per cent” of Glen Dimplex’s group revenues, which would suggest it contributes close to €50 million to the business — Glen Dimplex does not publish group accounts but its revenues are estimated to be more than €1.5 billion. He did not refer directly to the sale price but he said the deal “would represent a remarkable milestone in value creation” from when company founder Martin Naughton bought it.
Speaking afterwards to The Irish Times, Mr Leamy confirmed the deal, which he said is “very attractive for us”. He said Morphy Richards had become very successful in China, with sales there of more than €200 million, and this attracted the buyer.
“Normally we would be more of an acquirer than a company that sells. But they made an approach, the offer was attractive and this is part opportunistic by us and part because of our planning. We have significant ambitions in other parts of the business,” he said.
Mr Leamy suggested the cash raised from the sale will be quickly deployed in other parts of the group. Glen Dimplex is heavily focused on driving growth in its heating and ventilation division, as well as in its flame division that sells decorative electric fires, and its precision cooling business. Its consumer electronics division, although publicly high profile with brand names such as Roberts Radio, is the second-smallest part of the group.
The Morphy Richards deal is not expected to have an impact on Glen Dimplex’s workforce in Ireland, although it could affect a small portion of its staff in Britain, where the Morphy Richards unit employs about 80.
