Whirlpool And Maytag: A Good Mix?

Benton Harbor, Mich. — Would a Maytag and Whirlpool merger be good for the trade?

Jeff Fettig, Whirlpool's chairman, president and CEO, told analysts that based on initial feedback, dealers are “extremely pleased” with the prospect, and would benefit from improved support and service, lower costs due to greater efficiencies, and a revitalized Maytag brand portfolio.

Retailers contacted by TWICE largely concurred.

Bill Trawick, president and executive director of the NATM Buying Corp., believes that Maytag would profit from Whirlpool's established global operations and its familiarity with the labor union issues that have been a drag on Maytag's earnings. Retailers, in turn, would benefit as other vendors “fight harder and become more aggressive” to counter increased competition from a Whirlpool-Maytag entity.

Jerry Throgmartin, chairman of H.H. Gregg, said a Whirlpool-managed Maytag “could be a very positive thing. Maytag holds some valuable brands, but they've been underperforming because the company can't fund innovation and styling as fast as the market demands. Their cost structure won't allow both profitability and competitiveness.”

Whirlpool, he observed, has the resources to take costs out of the system and reinvigorate Maytag's brands in the marketplace.

Throgmartin also dismissed concerns by some dealers that a vendor consolidation would reduce retailers' bargaining power. “There are enough powerful, quality suppliers in the industry to keep it competitive,” he said, citing GE, Electrolux and the “emerging powers” of LG and Samsung.

Randy Johnson, major appliances merchandising VP for BrandsMart U.S.A., a NATM member, also supports the deal. “It would be a big positive,” he said. “Whirlpool already has the organization in place and wouldn't have to reinvent the wheel. They can give Maytag a chance to compete against the importers.”

What remains unclear is how Whirlpool would manage a combined brand portfolio, given the comparable marketplace positioning of the mid-market Whirlpool and Maytag, premium KitchenAid and Jenn-Air, and opening price point Roper and Magic Chef nameplates. Johnson, for one, thinks Whirlpool could help Maytag map out a more defined distribution strategy that would “allow it to be more things to more people without stepping on anybody's toes.”

The two companies could also complement each other from a category perspective, Trawick noted, with Whirlpool drawing upon Maytag's strength in dishwashers, cooking and French door refrigerators.

A merger between Whirlpool, the largest U.S. majap maker, and Maytag, the No. 3 white goods vendor, is also likely to raise antitrust concerns, particularly in laundry where both companies maintain a dominant market share.

Whirlpool's Fettig addressed the issue during two separate conference calls, arguing that a union would allow Maytag to better compete in a fiercely competitive global marketplace. He noted that absent Whirlpool's considerable private label Kenmore business with Sears, the two companies' combined market share is “well below” 50 percent — the Justice Department's antitrust threshold — citing TWICE research partner The Stevenson Co.