Catalan company Cata buys bankrupt domestic appliance business Fagor

Torelló (ACN). – The Basque domestic appliance company Fagor Electrodomésticos, which declared bankruptcy in November 2013, has been bought by the Catalan company Cata. On Tuesday the Mercantile Court Number 1 in San Sebastian awarded Fagor's assets to the Catalan domestic appliance company for the price of €42.5 million, €14.5 million more than was offered by the Algerian company, Cevital. Cata offer covered all of the bankrupt divisions of the Basque cooperative and pledged to create 705 direct jobs in the Basque Country as well as ensuring the continuity of the brand names Fagor, Edesa, Aspes and Splendid. The Catalan company stated that the purchase of Fagor was extremely important because "the decision making centre will remain in Catalonia and in Spain" and will create "industrial synergies" between the two companies. Cata is based in Torelló, a town near the city of Vic (Central Catalonia).

On top of the €42.5 million for the purchase of Fagor, Cata has guaranteed 705 direct jobs in addition to 1,250 indirect jobs. This was substantially more than the offer from its competitor, the Algerian food manufacturer Cevital, who offered just €28 million for the Basque company and pledged to create 500 direct jobs and some 1,000 indirect jobs. Furthermore, the offer from Cata included all of Fagor´s production units and business lines, whilst the offer of Cevital was limited to the purchase of the production lines of washing machines, dishwashers and refrigerators, which the food manufacturer proposed to move to Algeria.

Company sources have told the CNA that Cata's plan expects to "create jobs in the Basque Country and strengthen those in Catalonia". In this regard, Cata has explained that the links established between Torelló's factory and Fagor would create a "productive synergies". However, Cata has made it clear that the two companies will operate independently of each other, with headquarters in both Catalonia and the Basque Country.

Cata intends to initiate Fagor's activity as soon as possible and to start work as early as September, although the initial products will not be released until October. Fagor's factories have been inactive since October 2013, when the company announced its bankruptcy. Sources from Cata revealed that negotiations about the purchasing of Fagor have been in progress since December 2013. 

The judge in San Sebastian's court decided to award Fagor Electrodomésticos to Cata after analysing five reports from the bankruptcy administrators. According to the company from Torelló, four of these reports "made it very clear that Fagor should be granted to Cata".

A company with over sixty years of history

Cata Electrodomèstics was founded in 1947 in Torelló, near the central Catalonian city of Vic (within the Osona County), and it originally specialised in domestic air extraction. However, in 1995 they introduced a new range of extractor fans and entered into the cooking market with hobs, ovens, microwaves, taps and sinks.

Cata's headquarters are based in Torelló, where they also have a factory, and two years ago the company established two new factories in China. There are 150 employees in the Catalan factory and 2,000 workers in the Chinese facilities. According to company sources, the high-end kitchen products are manufactured in Torelló, whilst the Asian factories are in charge of the middle to low-end ranges. Currently, the company is present in over 180 countries and has an annual turnover of €120 million.

Cata is part of the domestic appliance group CNA, which also includes the Spanish brands Apelson (acquired in 1999) and Nordor (acquired in 2004). Nodor manufactures hobs, ovens, wine bars, sinks, taps and various kitchen accessories, whereas Apelson specialises in a wide range of kitchen equipment such as extractor fans, ovens, microwaves and hobs.

Legal Points

The report from the judge at San Sebastian's Mercantile Court Number 1 , José Malagón Ruiz, states that the best offer for Fagor came from the CNA group and that he agrees "completely" with the points made by the bankruptcy administrators. According to the judge, "it is not difficult to spot the best bid considering the substantial difference between the offers". The judge explained that the Algerian group, Cevital, had pledged to pay straight away whilst the CNA "had asked to pay in four annual instalments of €20 million". However, Malagón thought the Catalan offer "had all the necessary guarantees" and "the difference in the price made it the more economically attractive offer".

According to the judge´s report, the parameters of CNA's offer are "wider". He stated that the group´s bid "included the revival of the activity in all the production units that were up for liquidation, as well as initiating activity in all of the factories and in all of the lines of manufacturing". On the other hand, according to the judge, the offer from Cevital included "the dismantling of the manufacturing lines of washing, dishwashing and cooling in the Basque Country and continuing their production in other factories belonging to the group". Furthermore, Cevital, unlike Cata, did not contemplate the purchase of the Edesa factory in Basauri, next to Bilbao.

In terms of the companies´ position on jobs, the magistrate also commented that the offer from the CNA group was better because "it states a commitment to job creation up to the tune of 850 new employees in 4 years, whilst Cevita only guaranteed 545 new job positions".  Malagón added that "the offer from CNA was also better in terms of job security as it included an €18,000 compensation package for every employee in the case of dismissal ". He concluded that the Catalan offer "contains a notable commitment to job creation and the industrial and economic revival of the Basque Country, which will provide a direct benefit to many creditors who want to continue their trade relations with the new company."