Sounds like a lot of speculation going on right now, but what are your predictions of what will happen to the company? Total doom and gloom, or the restructuring of one of Iowa's homegrown companies?
I certainly am concerned that the HQ will be leaving for greener pastures, and that the plant was already on the hit list anyway. I do think that the company would've really endured some serious problems, possibly going bankrupt if this deal didn't take place.
The Reggie article about the purchase:
The Maytag deal: What it means to Newton's blood, sweat and fears
No changes for now in Newton, CEO says
By WILLIAM RYBERG and DONNELLE ELLER
REGISTER BUSINESS WRITERS
May 20, 2005
Newton, Ia. - Maytag Corp., an Iowa business icon, is being purchased by an out-of-state investor group in a deal worth $2.1 billion.
The nation's third-largest appliance maker announced the sale late Thursday afternoon. The buyer is an investor group led by Ripplewood Holdings LLC, a global diversified holding company based in New York.
The deal, subject to shareholder and other approvals, would turn Maytag into a privately held company for the first time in 80 years. The company, founded in Newton in 1893, has scrambled recently to recover from falling sales, profits and stock price.
Maytag said the investor group will acquire all outstanding shares of Maytag stock for $14 a share, or $1.13 billion in cash, and will assume about $975 million in Maytag debt. The per-share sale price was 21 percent higher than the stock's closing price on Thursday, $11.56.
Leaders in Newton said they were surprised by the announcement and worried about the future.
"We're working very hard to understand what's going on," said Mayor Chaz Allen , who added that Newton workers have poured 112 years of "blood, sweat and tears in this product."
Ron Foreman, a member of the Newton City Council, said the one question on residents' minds is: "Will the plant remain open? . . . There are a lot of unknowns for everybody."
Ralph Hake, Maytag's chief executive, said the deal would not lead to immediate changes in Maytag's hometown. He said company headquarters would remain there as long as he is CEO.
"I'd say it's business as usual in regards to the Newton plant," Hake said in an interview Thursday night. But he added that he couldn't make promises about the plant's long-term viability.
Maytag has said the Newton plant is in jeopardy because it is the highest-cost manufacturing operation in the company's system. Maytag has been on a cost-cutting binge as it tries to compete with rivals - domestic, Asian and European - that have more production capacity in countries where manufacturing costs are lower.
"We have articulated as clearly as possible the issues with the cost structure of the plant, and we're working with the union," Hake said.
He said Timothy Collins, Ripplewood's chief executive and founder, is "very sensitive to the human considerations here and certainly wants to see things work out." Collins "will do everything he can to cut a fair deal in what is a very intense global economy," Hake said.
But the board has to "consider the future of the company and the problems that we have to resolve over the next several years," he said.
Maytag's directors have approved the agreement and intend to recommend approval by shareholders, the company's announcement said. The transaction is expected to close before the end of the year and is subject to shareholder approval and closing conditions such as the receipt of financing and regulatory approval.
Hake told the Wall Street Journal that if a rival bidder emerges, the company would consider other approaches.
He said Ripplewood brings a "whole new capital structure and significant equity" to Maytag. The investor group gives Maytag "access to global markets, access to global capabilities and competencies," Hake said.
"Maytag can be one component of a global enterprise," he added.
LaVonne Reinert of Ankeny said she has been buying Maytag shares since 1989 - none for less than $14. "We'll take a loss on the shares we hold," Reinert said.
Nonetheless, she said, she believes the price is probably fair "given what the company has been through."
Reinert said it's possible that union shareholders might try to block the sale, which could possibly push Ripplewood to offer more. Employees have "a lot invested, considering that many might have been buying shares for their retirement," said Reinert, who is considering buying more stock today in an attempt to recoup some losses.
Aside from her investment, Reinert said, she's concerned for Newton residents.
"Maytag is such an important part of Newton, it's scary. . . . I don't know what Newton can do. I truly hope Newton doesn't lose out in the end. It would never be the same for them," she said.
The company's Newton washer/dryer factory employs about 1,350 workers, down from around 2,500 as recently as 2002. Maytag also employs several hundred workers at its Newton headquarters. The company's only other Iowa operation is a refrigerator factory in Amana that employs about 2,300 workers.
The company has closed a refrigerator factory in Galesburg, Ill., opened factories in Mexico, cut salaried jobs, and dramatically reduced production work forces at Newton and a vacuum cleaner plant in North Canton, Ohio. Maytag says the two factories are its highest wage and benefit plants.
Mike McGarr, director of research at Portland, Ore.-based Becker Capital Management, said Maytag has cut costs too slowly.
"I'm surprised management is accepting a $14 bid," McGarr told Bloomberg News. "We visited with them in January and they were pretty upbeat with their prospects."
Gov. Tom Vilsack's spokesman, Matt Paul, said Thursday night that Vilsack is working to find out more about Ripplewood's proposal. "We want to do everything we can to support the community of Newton, the workers and families," Paul said.
Jeff Taufield, a spokesman for Ripplewood, said the Collins-led group has purchased about 50 companies since it started in 1995. "Traditionally, they're very long investors," he said.
Collins said in a statement that the new owners' objectives would be to continue to take action for Maytag 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."
He said the investor group looks forward to working with Hake and other Maytag executives "to restore the luster that this well-known consumer and home appliance company enjoyed for so many decades."
Maytag stock, which traded as high as $74 in 1999, has fallen to lows not seen since the early 1990s in recent months. Maytag shares closed Thursday at $11.56, up 9 cents. Shares rose to $15.55 in after-hours trading after the deal was announced, according to Bloomberg News.
