Aug. 8, 2010 Home appliance maker Whirlpool Corp. said it will buy Emerson Electric Co.’s ( EMRN.N ) InsinkAerator division, which makes waste disposal equipment and hot water dispensers, for $3 billion.

With over 70% market share in the food waste disposal industry, InSinkErator is a well-known household name in the United States. Following the acquisition, the InSinkErator will add to Whirlpool’s portfolio of domestic washing machines, refrigerators and dishwashers.

InSinkErator makes food waste disposers integrated with kitchen sinks to break down waste, which flows directly into wastewater treatment plants or into the sewer system.

Whirlpool, which plans to finance the deal with cash and debt, said during an investor call that the InSinkErator is expected to benefit from a strong replacement cycle and strength in the U.S. housing industry over the long term.

Bernberg analyst Philip Buller said Whirlpool could use the InSinkErator to expand its presence outside of North America, where the penetration rate of the waste disposal system is very low.

InSinkErator posted twelve-month revenue of $595 million through the end of March. It was founded in 1938 and acquired by Emerson in 1968.

The deal, which is expected to close in the fourth quarter, will help Emerson Electric downsize its structure as it follows in the footsteps of other conglomerates as it works to reposition itself as a technology-focused company. Read more

“Once upon a time, it was big, because you go into all these new markets, because they had high growth, you need a big source to do it. Today, that’s not the story,” William Blair analyst Nicholas Heyman said.

Greenhill & Company LLC served as financial advisor to Whirlpool while Wachtel, Lipton, Rosen & Katz served as legal counsel.

Reporting by Nathan Gomes in Bengaluru; Editing by Neha Arora and Shailesh Kuber

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