DES MOINES, Iowa, June 7, 2005 -- Timothy Collins, the man behind the proposed purchase of Maytag Corp. by buyout firm Ripplewood Holdings, attributes much of his success to luck. But the grandson of Kentucky tobacco farmers acknowledges a knack for analyzing businesses with problems and knowing how to bring them back to profitability.
Collins, 47, best known for buying failing Japanese businesses including the former Long-Term Credit Bank, now faces the challenge of growing Maytag's global business while dealing with the repercussions of the possible closing its headquarters factory in Newton, Iowa.
Collins offered to pay $1.13 billion on May 19 for Maytag, the nation's third largest appliance manufacturer -- behind Whirlpool Corp. and General Electric Co. -- saying it fits into his investment strategy of finding companies he can improve through an infusion of money and improved management.
Collins dismissed criticism by shareholders and analysts that his $14 per share offer is undervalued. Several shareholder groups have said they plan to vote against the deal and some have filed lawsuits to halt the sale.
"We've been looking at this industry for five or six years and we've been looking at this company for 15 months. I think if we didn'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 a telephone interview with The Associated Press.
He said Ripplewood and its co-investors plan to provide Maytag with the capital needed to invest in its core business and make long-term decisions, freed from the pressure of showing quarterly results as a public company.
"I don't know how to operate businesses. I know how to find guys who do, and I know how to do a lot of industry analysis and strategic 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 for generations owned a tobacco farm. After completing a master degree from Yale and working in a series of management jobs, he founded Ripplewood Holdings -- named for his grandmother's tobacco farm -- in 1995.
Ripplewood started with $450 million and since has built its holdings to what Collins says is a value of more than $12 billion. California Public Employees' Retirement System has disclosed it has invested in Ripplewood funds, but Collins did not immediately reply to a request for a list of other investors; as a private company, Ripplewood does not file quarterly reports with the U.S. Securities and Exchange Commission.
Collins orchestrated a $1.2 billion purchase of the former Long-Term Credit Bank in Japan in 2000. Renamed Shinsei Bank, an initial public offering in February 2004 yielded about $2.3 billion for Collins and fellow investors. Other Japanese investments have included Japan Telecom Holdings, an ailing telephone company and Seagaia, a resort complex.
Although the Japanese ventures have generated the most publicity, 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 in the U.S."
Ripplewood's History of Buyouts
Ripplewood has put money into chemical companies, publishing businesses, restaurant equipment, food, car dealerships and concrete accessories. Collins' company and another private partner own 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, a company listed on the Belgian stock exchange, which funds most of Collins' major investments overseas.
RHJ is also a partner in the consortium planning to buy Maytag and assume its $975 million of debt. The other investors are Goldman Sachs Capital Partners, part of the Wall Street firm, and London-based J. Rothschild Group, an investment business controlled by Jacob Rothschild, a member of the European banking family.
Collins said he was drawn to Maytag because of its "great collection of brands," which include Maytag, Amana, Hoover, Jenn-Air and Magic Chef.
Maytag has faced challenges in recent years from increasing costs, slipping profitability, sliding stock value and intense competition from Asian manufacturers such as LG Electronics and Samsung, both South Korean companies.
Maytag Chief Executive Ralph Hake disclosed at last month's shareholder meeting that the company's flagship factories in Newton, where Maytag washers and dryers are made, could be closed and the production moved elsewhere. He also mentioned the Hoover factory in North Canton, Ohio, noting that Newton and North Canton are 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 will operate in many markets around the world and that every plant should be competitive.
Ted Johnson, president of the United Auto Workers local representing 1,340 workers in Newton, said that plant is running at about 40 percent capacity. With new owners talking of improving promotion and expanding globally, workers hope the plant can get back to full production and won't close or lose more workers, he said.
"I hope this is hugely successful because, based on the direction we were going, it didn't look good," Johnson said.
"We want what everybody wants," Johnson said. "We want to see a plan for not just short-term goals, we want to see long-term goals and give people some security."
Johnson said said he met Collins and was impressed. "He appeared to be a very well spoken, intelligent individual that admittedly knows how to make money," Johnson said. "I don't know what his plans are, but his track record would indicate that he's very successful in turning businesses around."