Some of Whirlpool’s biggest appliance rivals said they were surprised the US Department of Justice required no divestitures in allowing the purchase of Maytag, but they do not expect the merger to affect their business strategies.
“I don’t think many of the manufacturers expected the government to approve without any conditions,” Soon Kwon, president of digital appliances at the US arm of South Korea’s LG Electronics , said at a weekend industry show in Chicago. “It was a real surprise.”
Whirlpool acquired Maytag, the maker of Hoover vacuums and Jenn-Air and Amana appliances, in a $1.7 billion cash-and-stock deal last month, shortly after the Justice Department declined to challenge the deal. Based on 2005 sales, Whirlpool will become the world’s largest appliance maker.
At the Kitchen and Bath Show in Chicago, a large Whirlpool banner proclaiming: “It’s the Beginning of a BRAND New Era” was displayed in the main entrance. The banner included logos of the Whirlpool and KitchenAid brands as well as the recently acquired Maytag, Jenn-Air and Amana brands.
“One of our biggest challenges is how do we get innovation faster to consumers,” said David Swift, president for Whirlpool North America. “What the Maytag portfolio of brands provides is a vehicle for us to do that.”
As Whirlpool absorbs Maytag, appliance rivals will be watching.
“I’ve been through a few major acquisitions in different industries in my career and they’re not easy,” said Keith McLoughlin, the head of Electrolux AB’s North American white-goods business. “There’ll be some challenges there and maybe therefore opportunities for us.”
Sweden’s Electrolux, whose brands include Frigidaire and Electrolux ICON, was the world’s No. 1 appliance company before the Maytag buyout.
McLoughlin said he was not shocked that Whirlpool was allowed to buy Maytag, but was surprised that no asset sales were required.
“What does that mean for us? I don’t think it changes the competitive nature of this business,” McLoughlin added. “It’s not going to make Electrolux do something materially different.”
LG and Electrolux noted that the new Whirlpool has a large US market share in some appliance categories, including more than 50 percent share in some laundry products.
LG’s Kwon said the Whirlpool deal may change the dynamics of the appliance industry in some ways, but added he was not expecting a marked effect on his company, which focuses on higher-end rather than lower-tier appliance segments in the United States.
Whirlpool and Maytag “may enhance their strengths in some areas, but in the premium segment we don’t expect that much impact,” Kwon said. “We know how to develop technologically advanced products. We will maintain our strategy.”
H.B. Lee, president of the worldwide home appliances division at South Korea’s Samsung Electronics , said he saw an opportunity for Samsung to cultivate more relationships as a result of the Whirlpool deal. Samsung makes some appliances for Maytag.
“We can set up a good relationship with Whirlpool because we are selling our product to Maytag,” Lee said. “We need to set up good relationships with manufacturers in the United States.”
From MSN Money
