DES MOINES, Iowa, June 7, 2005 -- Timothy Collins, the man behind theproposed purchase of Maytag Corp. by buyout firm RipplewoodHoldings, attributes much of his success to luck. But the grandsonof Kentucky tobacco farmers acknowledges a knack for analyzingbusinesses with problems and knowing how to bring them back toprofitability.
Collins, 47, best known for buying failing Japanese businessesincluding the former Long-Term Credit Bank, now faces the challengeof growing Maytag's global business while dealing with therepercussions of the possible closing its headquarters factory inNewton, Iowa.
Collins offered to pay $1.13 billion on May 19 for Maytag, thenation's third largest appliance manufacturer -- behind WhirlpoolCorp. and General Electric Co. -- saying it fits into his investmentstrategy of finding companies he can improve through an infusion ofmoney and improved management.
Collins dismissed criticism by shareholders and analysts thathis $14 per share offer is undervalued. Several shareholder groupshave said they plan to vote against the deal and some have filedlawsuits to halt the sale.
"We've been looking at this industry for five or six years andwe've been looking at this company for 15 months. I think if wedidn't think we were giving the shareholders a full and fair price,we wouldn't have raised our hand to do this," Collins said in atelephone interview with The Associated Press.
He said Ripplewood and its co-investors plan to provide Maytagwith the capital needed to invest in its core business and makelong-term decisions, freed from the pressure of showing quarterlyresults as a public company.
"I don't know how to operate businesses. I know how to findguys who do, and I know how to do a lot of industry analysis andstrategic analysis and I know how to invest," Collins said.
From a Family of Tobacco Farmers
Collins was born in Frankfort, Ky., to a family that forgenerations owned a tobacco farm. After completing a master degreefrom Yale and working in a series of management jobs, he foundedRipplewood Holdings -- named for his grandmother's tobacco farm -- in1995.
Ripplewood started with $450 million and since has built itsholdings to what Collins says is a value of more than $12 billion.California Public Employees' Retirement System has disclosed it hasinvested in Ripplewood funds, but Collins did not immediately replyto a request for a list of other investors; as a private company,Ripplewood does not file quarterly reports with the U.S. Securitiesand Exchange Commission.
Collins orchestrated a $1.2 billion purchase of the formerLong-Term Credit Bank in Japan in 2000. Renamed Shinsei Bank, aninitial public offering in February 2004 yielded about $2.3 billionfor Collins and fellow investors. Other Japanese investments haveincluded Japan Telecom Holdings, an ailing telephone company andSeagaia, a resort complex.
Although the Japanese ventures have generated the mostpublicity, Collins said most of his investments have been in U.S.companies. "They've just been so much higher profile in Japan,"he said. "We've got a long 15-year pretty solid track record inthe U.S."
Ripplewood's History of Buyouts
Ripplewood has put money into chemical companies, publishingbusinesses, restaurant equipment, food, car dealerships andconcrete accessories. Collins' company and another private partnerown catalog distributor Lillian Vernon Corp. and Time Life Inc.,the music and video direct marketing division of Time Warner Inc.Collins put $50 million of his own money in RHJ International, acompany listed on the Belgian stock exchange, which funds most ofCollins' major investments overseas.
RHJ is also a partner in the consortium planning to buy Maytagand assume its $975 million of debt. The other investors areGoldman Sachs Capital Partners, part of the Wall Street firm, andLondon-based J. Rothschild Group, an investment business controlledby Jacob Rothschild, a member of the European banking family.
Collins said he was drawn to Maytag because of its "greatcollection of brands," which include Maytag, Amana, Hoover,Jenn-Air and Magic Chef.
Maytag has faced challenges in recent years from increasingcosts, slipping profitability, sliding stock value and intensecompetition from Asian manufacturers such as LG Electronics andSamsung, both South Korean companies.
Maytag Chief Executive Ralph Hake disclosed at last month'sshareholder meeting that the company's flagship factories inNewton, where Maytag washers and dryers are made, could be closedand the production moved elsewhere. He also mentioned the Hooverfactory in North Canton, Ohio, noting that Newton and North Cantonare the company's highest-cost locations.
Collins declined to be specific about plans for the factories,saying the investors are studing the company, assuming it willoperate in many markets around the world and that every plantshould be competitive.
Ted Johnson, president of the United Auto Workers localrepresenting 1,340 workers in Newton, said that plant is running atabout 40 percent capacity. With new owners talking of improvingpromotion and expanding globally, workers hope the plant can getback to full production and won't close or lose more workers, hesaid.
"I hope this is hugely successful because, based on thedirection we were going, it didn't look good," Johnson said.
"We want what everybody wants," Johnson said. "We want to seea plan for not just short-term goals, we want to see long-termgoals and give people some security."
Johnson said said he met Collins and was impressed. "Heappeared to be a very well spoken, intelligent individual thatadmittedly knows how to make money," Johnson said. "I don't knowwhat his plans are, but his track record would indicate that he'svery successful in turning businesses around."