Montreal-based Maax Corp. in talks to sell U.S. spa division to Arctic Spas

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This article was published 28/05/2008 (6660 days ago), so information in it may no longer be current.

MONTREAL – Cash-strapped Canadian bathroom fixture maker Maax Corp. has begun talks to unload its spa division to an Alberta competitor, with the hope of reaching a final deal by mid-June.

Maax Corp. said Wednesday it has entered exclusive negotiations with Spa Logic Inc. of Thorsby, Alta., also doing business as Arctic Spas, and hopes to have a final agreement by June 15.

That’s also the target date for reaching a deal to sell the entire company.

The companies anticipate that Arctic Spas will acquire a significant portion of the assets and the warranty liabilities of Maax Spas (Arizona) Inc., the Montreal-based company’s spa division.

Maax, taken private in 2004, is the third-largest supplier in the bathtub and shower fixtures market in the United States.

Its bottom line has been hurt by the ongoing slump in the home building business.

“Maax’s strategic business plan is to grow its core business – the bathroom sector – in North America to continuously enhance value to all our stakeholders,” Paul Golden, Maax’s president and chief executive, said in a statement.

“As part of our continuous commitment to our customers, we are pleased to have identified Spa Logic, an experienced industry player, to continue to service our existing customers in the normal course of business.”

The acquisition will give Arctic Spas a presence in eastern Canada and the United States, stated James Keirstead, vice-president marketing of Spa Logic Inc.

“And since our core business is quality hot tubs, the various Maax lines will both complement and supplement our existing product line-up, giving us a strong base for the future.”

The move comes a few weeks after Maax rejected a takeover offer from the company’s founders, the Poulin family. Details of that offer haven’t been disclosed.

But Marie-France Poulin, vice-president of the Camada Group, has said it is no longer interested in the company after working hard to present an offer.

Industry observers have speculated that without the Poulin family’s interest, the best hope for sale of Maax remains with private equity.

The sale of Maax comes in the midst of a weakened U.S. housing market, which is slamming supplier companies amid growing pressure from Asian imports.

Placide Poulin founded Maax in’69 in Ste-Marie-de-Beauce, southeast of Quebec City. He sold it for $640 million, including debt, in June 2004 to a private equity consortium headed by Boston firm J.W. Childs Associates.

The Ontario Municipal Employees Retirement System, one of Canada’s largest public-sector pension funds, owns a 20 per cent stake.

The spa division accounted for 9.2 per cent of Maax’s sales last year. Revenues totalled $34.5 million, out of $410.2 million. It lost $180 million in 2007.

At the end of its last fiscal quarter, Maax had a debt of about $500 million.

Maax hot tubs sold under the Coleman, Elite and Nahanni brands are manufactured in Chandler, Ariz. They retail for between $5,000 and $15,000.

The sale of the spa division should have no impact on its 90 employees or manufacturing operations, said Maax spokeswoman Stephanie Jarrold.

“Quite the opposite, the purchase of Maax’s spa division will help strengthen their presence in eastern Canada and the U.S.,” she wrote in an e-mail.

Maax employs 2,000 people in 16 plants and independent distribution centres in North America and Europe.

Spa Logic is headquartered in Thorsby, Alta. southwest of Edmonton, with plants in Breton and Coleman. It is one of the top 10 North American spa manufacturers. Its Arctic Spas are a division of Blue Falls Manufacturing.

It had sales of $63 million in 2006.