Newton, Iowa -- The consolidation that has hit major appliance retail shifted to manufacturing today with the announcement of Maytag's planned $350 million acquisition of Amana Appliances.
The blockbuster deal, which is set to close in the third quarter pending regulatory approval, will inexorably alter the majap landscape by reducing the pool of full-line domestic white goods manufacturers from five to four. Fifth-ranked Amana will then join a Maytag brand wagon that also includes the Jenn-Air, Magic Chef and Admiral nameplates, while its $900 million in revenue will narrow the market share gap between third-place Maytag and second-place GE Appliances.
Industry observers had anticipated a vendor contraction given the sluggish selling environment, increased offshore competition and margin erosion in the wake of a costly battle for volume. While Maytag had been the rumored target of a takeover last year by Electrolux, whose Frigidaire unit is fourth in the majaps stakes, Amana was the weakest link in the supply chain with an estimated 4 percent of white goods sales. As Maytag president/CEO Len Hadley noted in a conference call to financial analysts following last week's acquisition announcement, Amana is only marginally profitable and suffered both earnings and market share deterioration during the four years since it was acquired by Goodman Holding Company from Raytheon Corp. for $750 million.
Nevertheless, the fit between the two companies, as outlined by Hadley, is as snug as a leather glove, with Amana filling key gaps in Maytag's portfolio. Most notable is refrigeration, a classification that Hadley conceded is Maytag's weakest product category and Amana's core competency. "Strength in refrigeration is critical for strength in appliances, and its revenue is the cornerstone for dealers," he said, noting that Amana's premium brand proposition in refrigeration would complement Maytag's strength in laundry and Jenn-Air's in cooking.