F&P confident it can see off extra rivalry

Competition may be heating up for Fisher & Paykel Appliances as its Chinese rival Haier looks to gain a larger foothold in the United States.

Haier is part of a consortium that has submitted a bid of at least US$1.25 billion ($1.77 billion) for Maytag, a century-old US company whose products include Maytag washing machines and Hoover vacuum cleaners.

The bid of about US$16 a share would trump by 14 per cent an earlier offer by private equity firm Ripplewood Holdings.

"Haier have obviously got aspirations to be a lot bigger than they are in the US market," First NZ Capital analyst Dwane Clark said.

"They are quite big in Asia and they send a lot of product to Australasia as well.

"The Maytag brands are fairly well established and well regarded. Haier, I would presume, would keep those brands and possibly expand the distribution of those brands down here into Australasia and Europe."

Fisher & Paykel says it will face up to any extra competition, if and when it eventuates.

"For us to say it would have a direct impact on anything we are doing would be pure speculation," spokesman Brian Nowell said.

"We certainly won't worry about it until we see something happening as a direct result of the purchase."

Haier China bought distribution company Black Diamond Holdings' 46 per cent stake in joint venture company Haier Appliances New Zealand in April.

It has since taken Fisher & Paykel to task over its exclusive dealer arrangements in this country.

Based in China, Haier is the fourth biggest whiteware firm in the world, supplying 165 countries.

Clark said any impact of the deal on Fisher & Paykel would be delayed, as Maytag had plenty of problems - including high raw material costs, a shrinking market share and low-cost competitors - to deal with.

"The deal could mean more competition for Fisher & Paykel but, in the shorter term, Haier will have enough on their plate trying to turn Maytag around."

Among Maytag's rivals are South Korea's LG Electronics and US-based Whirlpool, with whom Fisher & Paykel has a strategic alliance.

Clark said the potential deal would give food for thought as to the value of appliance company shares.

"Probably the most interesting aspect of it for the market is the multiples implied by the price paid, and really just what the value of an appliance manufacturer might be.

"People will start looking at that and potentially making comparisons across to Fisher & Paykel."

Shares in Fisher & Paykel Appliances closed up 1c yesterday to $3.35.

- NZPA