Maytag Corp. has completed its purchase of Amana Appliances, and announced an agreement to sell its Blodgett commercial cooking products business to The Middleby Corp. These moves advance Maytag's strategy of concentrating on home appliances and vending.
The Amana transaction, under which Maytag will purchase Amana's major appliance and commercial microwave oven businesses from Goodman Holdings, Inc. for $325 million, was reported early this summer (see V/T, June). The acquisition does not include Amana's home and commercial heating and air conditioning businesses.
Maytag reports that the deal will add about $900 million to its consolidated annual sales. It expects the Amana acquisition to be accretive to per-share earnings by a percentage "in the high single digits" in 2002, the first full year of combined operation, and double-digit accretive in 2003. For the remainder of 2001, the acquisition is expected to reduce earnings per share by six to nine cents, with most of the impact occurring in the fourth quarter.
The Blodgett transaction calls for The Middleby Corp. to purchase Maytag's Blodgett unit for $80 million in cash and a $15 million note. The sale is subject to regulatory approval, and is expected to be completed in the fourth quarter of this year. Maytag plans to use the proceeds to reduce debt. Jade Products, another Maytag commercial cooking business, is not part of the Blodgett sale. The Middleby Corp. is a worldwide supplier of equipment to the foodservice industry. Its major brands include "Middleby Marshall," "Southbend" and "Toastmaster," and its net sales were $127 million in 2000.
This spring, Maytag had stated its intention of exploring the sale of Blodgett, which manufactures commercial cooking equipment under the "Blodgett," "Pitco Frialator," "MagiKitch'n" and "Blodgett Combi" brand names. In connection with the sale to Middleby, Maytag will record a non-cash loss in the third quarter of approximately $60 million. However, the transaction is not expected to have a significant impact on ongoing sales and earnings.
Maytag chairman and chief executive officer Ralph F. Hake explained the logic of the two transactions. "Today, Maytag and Amana are stronger together. We are stronger strategically, operationally and financially," he said. "We are stronger in brand, in product, and in distribution reach. And we have created the opportunity to become much more cost effective and operationally efficient in our major appliance business.
"We recognize an acquisition of this type - at this time in the industry cycle , will require a clear vision for the business, strong execution, and the wherewithal to make decision quickly and to implement change swiftly. We are prepared to do that."
Regarding the sale of Blodgett, Hake noted,"Blodgett is a fine company, with strong products and brands. Earlier this year, Maytag decided its strategies for growth should be focused on its core home appliance and vending businesses. That meant Blodgett's opportunities for growth would be best served by being part of a company that has a proven track record of success in the commercial foodservice industry. I agree with that strategic perspective, and we are pleased that The Middleby Corp. has agreed to purchase our Blodgett business."
Selim Bassoul, president and chief executive officer of The Middleby Corp., hailed the acquisition of Blodgett as "an excellent strategic fit." He explained that merging Blodgett into Middleby will double the company's size. "The broad line of products resulting from the acquisition, combined with the strength of Middleby's existing global sales and distribution infrastructure, will position Middleby as the leading cooking equipment supplier in the foodservice industry," Bassoul predicted.
The sale of Blodgett continues the change in direction undertaken by Maytag last year, when it changed its "group" structure and returned to individual business units whose presidents report directly to the CEO (see V/T, December 2000). In 1999, the company had combined its vending business unit, Dixie-Narco, with its foodservice equipment unit, whose core was Blodgett, into the short-lived Commercial Solutions Group.