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Whirlpool Selling Hoover

5/24/2006 09:03:00 AM Eastern

Benton Harbor, Mich. — Whirlpool has decided to put its Hoover floor-care unit on the auction block.

The company, which acquired the business as part of its $2.6 billion buyout of Maytag, said it has received “strong interest” from a number of potential buyers, and expects to divest the division before the end of the year.

Also being parceled off are the following: Maytag’s Dixie-Narco vending machine, Amana commercial microwave and the Jade commercial appliance businesses.

“The decision to divest the floor-care and commercial businesses will allow us to focus on integrating our core Maytag and Whirlpool appliance businesses,” said Jeff Fettig, Whirlpool’s chairman and CEO.

The world’s largest majap maker also confirmed that its merger with Maytag will save the company $400 million a year, which comes in at the high end of earlier projections of $300 million to $400 million per year. Cost efficiencies are expected from all areas of the value chain, including product manufacturing, infrastructure and support areas, global procurement and logistics, the company said.

Whirlpool now expects to incur approximately $450 million in pretax, one-time costs to realize the annualized savings, compared to earlier projections of $350 million to $500 million.

“Our increased savings estimates further demonstrate the value-creating opportunity of this acquisition,” Fettig said. “We have moved quickly to integrate the Maytag business since closing the transaction seven weeks ago and we are pleased with our progress to date.”

In a conference call, Fettig and Whirlpool North America president David Swift noted that the acquisition extended Whirlpool’s brand reach from 75 percent to 95 percent of all retail outlets, and more than doubled its brand preference from 25 percent to 55 percent. Management hopes to “quickly revitalize the Maytag brand” and raise it to Whirlpool’s level of profitability over the next seven quarters by increasing asset utilization, lowering cost structure and investing in new product development, the executives said.

Specifically, Whirlpool plans to expand and accelerate Maytag product introductions through the largest R&D investment in company history, outsource its distribution centers and consolidate administrative personnel while retaining much of Maytag’s sales force.

The company also plans to beef up Amana, which Swift described as “the most underutilized brand in the appliance industry.” To that end, the company, as it is doing for each of its new brand families, is conducting consumer research to characterize Amana’s brand identity, determine which consumer segments it resonates with and develop differentiated products accordingly.