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ATLANTA - Whirlpool Corp said today it would sell its Hoover vacuum cleaner business to Hong Kong's Techtronic Industries Co for US$107 million ($155 million) to focus on its core appliance business.
Techtronic, maker of Ryobi and Milwaukee tools, sees Hoover as a good fit with its own
vacuum lineup, including Dirt Devil and Regina in the United States and Vax in Britain. Techtronic said it will invest heavily to reinvigorate the brand, which is nearly 100 years old and has iconic status in some countries.
Hoover has struggled in recent years with high fixed costs, fierce competition and a lack of innovation. Whirlpool acquired Hoover when it purchased smaller rival Maytag Corp this year.
"Hoover is a high-end brand and a commercial brand, and that's exactly where we are going in the future," Joseph Galli Jr, chief executive of Techtronic's global floor care and appliances business, told Reuters.
"We are going to develop innovative trade-up products that serve the whole spectrum of the market," Galli added.
He declined to comment on specific plans for Hoover, which has manufacturing plants in Ohio, Texas and Mexico.
One analyst said he would not be surprised if some Hoover operations were moved to lower-cost overseas locations.
Techtronic "just needs to bring down costs for Hoover," said Mirko Mikelic, a senior portfolio manager with Fifth Third Asset Management. "Hoover has a lot of brand value, but it's been losing market share."
He said Hoover may have fetched a lower-than-expected price because of potential buyout costs for US unionized staff.
"I think people are in limbo, wanting to know what their destiny is," said Jim Repace, president of Local 1985 of the International Brotherhood of Electrical Workers union, which represents 800 Hoover workers.
Whirlpool announced plans to sell Hoover and other unprofitable commercial operations of Maytag in May. It has already sold the Dixie-Narco vending systems and Amana commercial microwave businesses, and expects to shed commercial appliance maker Jade by the year's end.
The Hoover purchase is expected to close in the first quarter of 2007 after regulatory clearance. Whirlpool said it would retain the liabilities associated with pension and post-retirement benefit plans for currently retired Hoover employees.
Whirlpool, based in Benton Harbor, Michigan, became the world's biggest appliance maker in late March when it bought Maytag for about US$1.7 billion in cash and stock.
Whirlpool shares fell US13 cents to US$86.24 in New York Stock Exchange trading, having risen about 3 per cent this year.
- REUTERS