Maytag's Buyers Envision Global Role For Manufacturer

By Alan Wolf On Jun 6 2005 - 6:00am

Regardless of how it plays out, Maytag's surprise acquisition announcement resolved a question, at least for the short term, which has been rippling throughout the white-goods business: What will become of Maytag?

The one-time industry leader born of the American heartland has lately fallen on hard times, due in part to its over-concentration of production in the United States. The result has been tumbling sales and earnings, as lower-cost competitors with greater offshore production, including a new wave of Asian majap contenders, have squeezed Maytag's domestic market share.

Compounding the problem is the company's Hoover floor-care unit, whose premium positioning has fizzled in the current commodity-driven, under-$100 home vacuum market.

Maytag has taken dramatic steps to reverse its flagging fortunes, including steep headcount reductions, the consolidation of its operating units under CEO Ralph Hake, and the opening of a major new manufacturing facility in Mexico. But those efforts failed to stem an 80 percent drop in first-quarter profit.

The buyers seemingly see value in Maytag's host of top drawer brands. Those include its titular flagship franchise which, aside from its problematic Neptune washer launch, had long been associated with quality workmanship, as symbolized by the company's lonely repairman mascot. Other holdings include the opening price point Magic Chef brand; the higher-end Amana, Jade and Jenn-Air lines; and the Dixie Narco vending machine business.

The acquisition group, Triton Acquisition Holding, is led by New York-based Ripplewood Holdings, a private equity firm with interests in the automotive, retail, banking and entertainment industries, and has, according to Hake, “extensive operating expertise in Asia and Europe.” Other investors include RHJ International, GS Capital Partners and the J. Rothschild Group of Companies.

“Maytag is a legendary company with a portfolio of world-class brands and a long history of producing high-quality, innovative products,” said Ripplewood's founder/CEO Timothy Collins. “We see an opportunity to leverage these strengths and build Maytag into a global leader as the fragmented home and commercial appliances industry consolidates.”

Collins said the new owners' objectives are “to continue to take action to become a global low-cost producer and to accelerate growth by introducing innovative new products, expanding its presence in international markets and pursuing selective acquisitions.”

Collins added, “We very much look forward to working with Ralph Hake and his management team, employees, customers and retail partners to restore the luster that this well-known consumer and home appliance company enjoyed for so many decades.”

Maytag said its board of directors will recommend that shareholders adopt the $1.13 billion cash merger proposal, which also calls for Triton's assumption of $975 million in Maytag debt.

“We have concluded that this transaction is in the best interest of our shareholders,” said long-time board member Lester Crown.