The Battle for Applica: What Next?

Implications: Nacco versus Harbinger - the ongoing battle heats up!

What is at stake and who is impacted?

Who will benefit when the battles over?



Analysis:

Hamilton Beach/Procter-Silex Parent NACCO's (NC) 12/26 cash offer of $7.50 per share is the latest in a battle for establishing a dominant position in the North American small appliance marketplace. The bidding has gone back and forth over the last few weeks, with Harbinger matching every NACCO bid almost immediately. It has been twenty four hours on this latest bid, and no word from Harbinger. They are certainly awake as they picked up a further piece of Spectrum today (Dec. 27, 2006)

The battle here is for 1st place in the North American Small Appliance market for Hamilton Beach, if they lose this battle to add-on Applica the they will most likely be relegated to a lonely third place. While all this is going on, a potential deal looms between Harbinger and Salton (Harbinger already owns 15.%% of Salton) So, in the end, there is a great deal at stake for both sides.

Jarden has solidified their market position with more than 20% of the market, combining AHP and Holmes/Rival in 2005. They have already begun to enjoy the synergies and NACCO smells that same potential to combine a great mix of category dominant products and brands. NACCO stock has returned to the $140 level after this latest offer, well below its 52 week high in the $170's, but is still strong.

This deal needs to be settled as soon as possible. The uncertainty of who will own Applica will certainly send good employees to the job market and make retailer squeamish about mid-longer term assortment decisions that involve a company in a state of flux.

The complications of combining these business regardless of who wins the battle for Applica will be considerable.