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Maytag to Buy Magic Chef for $756.2 Million : Gives Appliance Maker Entree Into Market for Refrigerators, Freezers

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Times Staff Writer

Maytag Co., best known for its washers and dryers, said Monday that it has reached an agreement to acquire Magic Chef, another leading producer of home appliances, in an exchange of stock valued at $756.2 million.

The Magic Chef acquisition will give Maytag an entree into the refrigerator and freezer market, a Maytag spokesman in Newton, Iowa, said.

Maytag presently manufactures laundry equipment and kitchen appliances, including dishwashers, gas and electric ranges, microwave ovens and food disposals under the brand names Maytag, Hardwick and Jenn-Air.

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Cleveland, Tenn.-based Magic Chef produces major and small home appliances under the names Norge, Admiral, Magic Chef and Toastmaster, and it also manufactures air-conditioning, heating and soft-drink vending equipment.

Magic Chef, which had fiscal 1985 sales of $1.06 billion and a profit of $53.6 million, will operate as a subsidiary of Maytag. S. B. Rymer Jr. is to continue as Magic Chef’s chairman and chief executive and will become chairman of Maytag’s executive committee.

Latest in String

The merger, which must be approved by shareholders of both firms, is the latest in a string of consolidations among large U.S. appliance makers.

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The combined company, with annual sales of about $1.7 billion, will command the fourth-largest share of the U.S. appliance market.

Whirlpool and General Electric together account for more than half of the market, and White Consolidated Industries accounts for about 15%, according to Charles K. Ryan, an analyst with Merrill Lynch in New York. Maytag-Magic Chef is expected to have a market share in the low teens.

Two weeks ago, White Consolidated, maker of Frigidaire, White-Westinghouse and Kelvinator brand appliances, was purchased by AB Electrolux of Sweden for $742.6 million. Whirlpool recently acquired KitchenAid, a leading dishwasher manufacturer, from Dart & Kraft.

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Martin Sankey, an analyst with First Boston Corp., said a number of companies recently had considered purchasing Magic Chef.

“There had been all sorts of vultures swirling around,” he said. “Magic Chef was deemed to be a good company that was relatively cheap.”

Terms of the definitive agreement call for each of Magic Chef’s 9.68 million shares of common stock to be converted into 1.671 shares of Maytag common stock.

Maytag closed Monday on the New York Stock Exchange at a new high of $46.75 a share, up $1.875 on a volume of 158,000 shares.

Magic Chef’s stock rose to a new high of $75.50 during trading on the NYSE but closed at $75.25 a share, up $3, on a volume of 252,400 shares.

Based on Monday’s closing market prices, the deal would be worth $756.2 million.

In the year ended Dec. 31, 1985, Maytag had sales of $683.7 million and net income of $71.8 million.

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Magic Chef operates a range manufacturing and distribution facility in the City of Industry that employs about 400 workers.

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