Whirlpool to sell Hoover floor-care business for $107 million
Thursday, December 7th 2006, 12:11 pm
By: News On 6
GRAND RAPIDS, Mich. (AP) _ Appliance maker Whirlpool Corp. plans to sell its iconic Hoover vacuum business, acquired in its recent purchase of Maytag, to a Hong Kong-based home improvement and construction tools supplier for $107 million.
The chairman and CEO of the buyer, Techtronic Industries Co. Ltd., called Hoover ``one of the most recognized brands in the world'' and a welcome addition to its floor-care portfolio that includes Dirt Devil, Regina and Royal.
The companies said in announcing the deal on Thursday that it could close as early as the first quarter of next year following regulatory clearance.
``The decision to divest the floor-care business allows us to focus on our core appliance business,'' Jeff M. Fettig, Whirlpool's chairman and chief executive, said in a statement.
Whirlpool markets the Maytag, KitchenAid and Jenn-Air brands, among others.
Techtronic will assume control of the North Canton, Ohio-based vacuum and floor-cleaner manufacturer while Whirlpool will retain pension and post-retirement benefit liabilities for retired Hoover employees.
``The addition of Hoover to our existing Royal Appliance and Vax floor care businesses will strengthen our market presence globally, by diversifying our customer base, expanding our product offering and adding scale to our operations,'' Horst J. Pudwill, Techtronic chairman and CEO, said in a statement.
Techtronic also sells Milwaukee and AEG power tools.
Benton Harbor-based Whirlpool acquired Hoover when it bought its former parent, Maytag Corp., in March for $1.8 billion. It also assumed about $800 million in Maytag debt in the deal.
In May, Whirlpool announced that it would try to sell Hoover and three other former Maytag companies: Hoover; Williston, S.C.-based Dixie-Narco vending systems; the Amana commercial microwave business, which is based in Amana, Iowa; and Brea, Calif.-based Jade commercial appliance business.
Fettig said Whirlpool has since sold Dixie-Narco and Amana, and is working to complete the Jade sale by the end of the year.
The Hoover Co. was family-owned until it went public in August 1943. Chicago Pacific Corp. acquired Hoover in 1985 and Maytag acquired Chicago Pacific four years later.
Craig Hutson, a Chicago-based senior bond analyst at fixed-income research firm Gimme Credit LLC, said the deal was a good one for Whirlpool. While Hoover is a well-known brand, he said it has lost money and market share in recent years due to increased foreign competition and poor marketing.
From Whirlpool's perspective, Hutson said the sale ``improves your overall credit profile because you're getting positive dollars for a business that's generating a loss and was going to need a fair amount of investment to get it back to stabilizing the business.''
Whirlpool shares rose 12 cents to $86.49 in midday trading on the New York Stock Exchange.