The combination of U.S. appliance makers Whirlpool Corp. and Maytag Corp. can deliver higher-quality appliances with more features to consumers, some appliance retailers said Thursday.
The U.S. Justice Department cleared Whirlpool’s $1.7 billion buyout of its smaller rival Wednesday and the deal will be completed by Monday. Based on 2005 results, the deal would bring the new Whirlpool’s annual sales to $19.2 billion, making it the world’s top appliance maker.
Appliance sellers said that, while they expect some Maytag plants to close during the difficult integration process, the merger improves prospects for the Newton, Iowa, maker of Hoover vacuums and Jenn-Air and Amana appliances.
“The merger will give consumers more choices that would not have been around the way Maytag was headed,” said Randy Johnson, senior vice president of merchandising at Miami-based BrandsMart.
Johnson expected the deal to improve his chain’s ability to lower prices to draw consumers, particularly on some higher-end Maytag products that were unilaterally priced.
“Whirlpool has a lot of work to do, but long-term it’s going to be good for us,” Johnson said.
Bill Trawick, president and executive director of New York-based NATM Buying Corp., whose members include appliance retailers, said Whirlpool can use its product research to bring new features and energy savings to Maytag products and reduce expenses by transferring production to lower-cost plants.
“With the backing of Whirlpool, we will start to see more new technology funneled through the Maytag brand,” Trawick said.
Trawick added that Maytag’s specialties could improve the quality of Whirlpool’s brands, which include KitchenAid and Roper. He noted Maytag’s innovation in refrigerators, with bottom freezers and Jenn-Air’s strength in kitchen appliances.
“We also see an opportunity for Whirlpool because cooking has not been one of its strongest categories,” Trawick said. ”Maytag will certainly enhance some of Whirlpool’s refrigeration products.”
John White, general manager of appliances at Brand Source/Associated Volume Buyers, one of the largest buying groups of appliance retailers, said consumers are better off now that Maytag was won by Whirlpool rather than a foreign company. Last year, Chinese appliance maker Haier considered a $16-a-share bid, but withdrew after Whirlpool entered the fray.
“The offshore manufacturers generally have a different perspective on the market from a consumer standpoint,” White said. “The product is as good, but things like warranty, consumer services are not as good.”
White also said retailers could help keep appliance prices in check by exercising their power to sell other brands.
“If Whirlpool raises prices 10 percent, we’re all going to switch to another brand,” White said. “There’s enough offshore manufacturers coming in.”