Whirlpool selling Hoover floor-care business for $107 million

12/7/2006

GRAND RAPIDS, Mich. Appliance maker Whirlpool Corp. will sell its iconic Hoover vacuum business for $107 million to a Hong Kong company that makes Dirt Devil vacuum cleaners.

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 Regina and Royal.

The companies announced the deal today and said it could close as early as the first quarter of next year, after 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 written statement.

Whirlpool acquired Hoover in its purchase of Maytag and markets its brands, along with KitchenAid and Jenn-Air, 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, Pudwill said.

Techtronic also sells Milwaukee and AEG power tools.

Benton Harbor-based Whirlpool bought Hoover s 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: 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 since has 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 13 cents to $86.50 in afternoon trading on the New York Stock Exchange.

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