Maytag Buyout: Private investor group to acquire company in $2.1 billion deal

Maytag Buyout: Private investor group to acquire company in $2.1 billion deal
 
Date May 19, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

More questions than answers arose after Maytag Corp. announced Thursday that it had inked a deal to be acquired by a private investment group.

As word of the sale swept through Newton on Thursday evening, many were wondering what the future held for current employees, pensioners and the future operation of the Maytag plant.

Earlier Thursday, the Maytag Board of Directors approved the merger agreement that calls for Ripplewood Holdings LLC to acquire all outstanding shares of Maytag stock for $14 per share, approximately $1.13 billion. In addition, the New York City-based investment firm agreed to assume $975 million in Maytag debt, bringing the transaction value of the deal to approximately $2.1 billion. The deal will have to be approved by shareholders and receive regulatory approval before being finalized.

The news left many Maytag retirees wanting more information before deciding whether the transaction is a good thing for the company and the community. All hoped the buyout would not bring about the demise of Maytag locally.

“There’s still a lot of pride at this company,” said Bill Ward, a member of the Jasper County Board of Supervisors and a retired Maytag employee. “A lot of these holding companies buy and then try to piecemeal the company out. I wouldn’t want to see that.”

Norm Reiner said he was worried about the benefits he now receives as a Maytag retiree and what the sale of the company might mean.

“I’m a retiree, and I’m scared about the pension and the insurance,” he said.

A Maytag worker who wished to remain anonymous said while standing outside Local 997 today that he hoped the buyout would allow production workers to continue to do their jobs.

“I’m hoping whoever’s buying Maytag will do the right thing and bring some dependability back to the company,” he said. “They should divest themselves of a lot of these other products and let us do our jobs to the best of our ability — make good quality washing machines. There’s a lot of pride here at this plant.”

Chuck Crews also hoped the plant would remain in Newton.

“It looks like they could work out something,” the 36-year veteran of Maytag said. “It would make me feel bad if Maytag left.”

UAW officials were uncertain what the news meant.

Ted Johnson, the new president of UAW local 997, planned to meet with the bargaining committee today to determine the next course of action. But like others, he was waiting for more information.

“For better than a year we’ve been waiting for something to happen,” Johnson said. “Now it’s happened and it’s unclear what it means, so until we know more, it’s business as usual.”

City officials were also trying to distill the news of the pending sale.

“We’re kind of working our way through it,” said Newton Mayor Chaz Allen. “We’re going to have to have a meeting some time with all parties to understand what this means for Newton. I know we’ve got 112 years of history and pride in all Maytag products, and we want to maintain that going forward.

“This may not be a bad thing. This may be a very good thing. We just have to sit down and understand what it means.”

Council member Mike Hansen said the move took him by surprise. He was one of several local officials who met with Maytag officials a few weeks ago. The topic of the sale was not addressed.

“I was surprised. Obviously we had no knowledge,” he said. “I’m hopeful that this means no huge changes for people working there in this community. I think we have to stay positive about announcements like this until everybody knows the facts.”

Rep. Leonard Boswell said in a statement, “I am hopeful Newton’s long history of supplying Maytag with hard-working Iowans will be fully understood by the new ownership should this transaction take place.”

Maytag spokesman John Daggett said many of those details will have to wait to be decided until the sale of the company is complete. He said shareholders will be sent information on the buyout offer in the near future and that a special meeting will be held to vote on the matter.

In the interim, Daggett said, “Maytag will continue to do what it has been doing — designing, manufacturing and making products and take care of our customers.”

Maytag board member Lester Crown, whose Crown Group holds more than 5 million Maytag shares, said in the statement the deal is in the best interest of shareholders.

“After careful consideration in conjunction with our independent advisors and an independent committee of Maytag‘s board consisting of all non-management directors, we have concluded that this transaction is in the best interest of our shareholders.

“This transaction will also provide Maytag with greater flexibility as a private company to accomplish long-term goals set out for the company.”

In a statement, Ralph Hake, Maytag CEO said, “Ripplewood has an excellent track record of building value at its portfolio companies by providing strong financial and strategic support. Ripplewood is active in the global markets and brings extensive operating expertise in Asia and Europe as well as North America, to Maytag.”

Tim Collins, founder and CEO of Ripplewood, said the investment group plans to help Maytag become a global low-cost appliance manufacturer.

Maytag is a legendary company, with a portfolio of world-class brands and a long history of producing high-quality, innovative products,” he said in a statement. “We see an opportunity to leverage these strengths and build Maytag into a global leader as the fragmented home and commercial appliance industry consolidates.

“Our objectives for Maytag are to continue to take action to become a global low-cost producer and to accelerate growth by introducing innovative new products, expanding its presence in international markets and pursuing selective acquisitions.

“We very much look forward to working with Ralph Hake and his management team, employees, customers and retail partners to restore the luster that this well-known consumer and home appliance company enjoyed for so many decades.”

Maytag has faced difficulties in recent years. It closed a refrigeration plant in Illinois and moved production to Mexico, and its recently acquired Amana operation in eastern Iowa. It cut 20 percent of its salaried workforce and shutdown management operations at its North Canton, Ohio, Hoover company. It was also socked by a class-action lawsuit over problems with early generation Maytag Neptune washers and was forced to pay the litigation costs associated with a lawsuit involving Amana.

The company continues to look at its “manufacturing footprint” as it tries to compete with low-cost competitors.

Locally, company officials have met with union leaders to try to bring the Newton plant in line with some of its other manufacturing operations in terms of cost and productivity. Those discussions continue, company officials said.

Daily News staff writers John Jennings and Andy Karr contributed to this report.

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