Viking and LG Form Strategic Relationship: EXCLUSIVE / UPDATED
Submitted by advisor on Thu, 01/21/2010 - 9:53am.
This is what we know:
The press release explains that the LG/Viking collaboration will include product line cross sourcing, procurement, R&D, service and joint distribution in Asia and the United States. Viking, like all the luxury makers, was deeply wounded by the recession, but the rumors were that Viking took a harder hit than the others. A significant part of Viking is owned by a private equity outfit called Stephens, and one could assume that they wish they had reduced their exposure to the appliance industry 3 years ago. The agreement is very similar to a global alliance between Whirlpool and Fisher Paykel in 2003. That relationship seemed to fizzle when Whirlpool got what it wanted.
This is what we think:
1) This is a much deeper agreement than the Whirlpool agreement.
2) There is so much collaboration going on, that one might conclude that the hardest thing one could do is run it without a merger.
3) LG seems to be getting everything important, that is distribution. What is Viking getting? Did money change hands?
4) Just because it seems like the first step to a merger, doesn't mean it is.
5) LG has been sued by Whirlpool and Fisher Paykel, slapped by Consumer Reports, punished by DOE, and who doesn't have a story about a team of LG engineers landing at your KBIS booth reverse engineering products right there in front of you? What are the chances that Viking is expecting to go to LG's apartment after dinner, while LG is planning to leave out the back before dessert?
VIKING PRESS RELEASE
FOR IMMEDIATE RELEASE
LG ELECTRONICS, VIKING
FORM STRATEGIC ALLIANCE
LAS VEGAS, Jan. 21, 2010 –Viking Range Corporation and LG Electronics, Inc. today announced that they have entered into a strategic alliance. Areas for collaboration include product cross-sourcing and joint procurement opportunities, and shared R&D and service resources, as well as expanded distribution.
Under the agreement announced today during the International Builders Show, LG plans to reach more U.S. consumers as Viking U.S. distributors will have the opportunity to carry premium LG appliances. This specialized distribution channel will complement LG’s existing U.S. network of national and regional appliance dealers. Viking plans to increase its international distribution, particularly in the rapidly expanding Asia/Pacific markets through its alliance with LG.
Fred Carl, Jr., CEO of Viking Range Corporation, said, “Teaming with LG will give our loyal distributors new growth opportunities while allowing Viking to work with one of the strongest global brands and technology leaders in home appliances. We look forward to this mutually beneficial relationship, including future opportunities for product development collaboration.”
“This alliance will leverage the respective brand, technology, marketing and distribution strengths of LG and Viking, enabling us both to satisfy a broader range of consumer needs,” said James Shad, President, LG Electronics USA. “Viking has built an exceptional brand, and LG is proud to be associated with this American icon’s heritage of quality and customer service.”
It is anticipated that Viking distributors will begin offering LG appliances beginning in the second quarter of 2010.
What Happens in Vegas
Let's try this it worked for me once when i Screwed Up in Vegas, Give it the Weekend Maybe Fred Carl will wake up on Sunday
Get a Divorce from this Korean Chick and maybe all will be back to normal on Monday Remember What Happens in Vegas Stays in Vegas!
Let's Hope...
How long...
...until LG Laundry is available in all 24 Viking colors? ;o)
What if???
I like the way AA has laid out facts and obeservations. Since none of us knows any more than what a press release stated, let's look at the long shot shall we? What if the long term plan involves the folks who control Viking buying some protion of LG? Does it always have to be the bigger fish buying the smaller one? Food for thought...
Anyone can buy stock of a
Anyone can buy stock of a public company. The possibility that Viking can buy enough of LG to make any difference is nill to none unless LG were interested in unloading the appliance business only. Then it would be nil to nil. Small companies do buy larger companies, but not this large. Those acquisitions require easy money that no longer exists, and an industry where the streets are paved with gold.
I only meant to suggest in the last comment that LG may be using Viking for its distribution, and have no intention for anymore than that, even if Viking pines for more.
How Right You Are !!!
That's why this is "only" a strategic alliance for the moment ... just like Delta had a "strategic alliance" with Northwest, and you see where that went !!!
This "arrangement" allows each party to play paddy cakes with the other for a time while the economics of a "deal" are in limbo ...
It's all done by design !!!
Who is next?
You could see this coming. Viking was hurt more than anyone and needs the economic support. Question is, who is next? This Asian tiger is hungry and wants to own the North American market, both in cooking and reefers. They don't care whose name is on the box, as long as they sell it. How long before they devour or push all the high end guys off the couch. Was that private Korean jet at the Madison airport last month just delivering kimchi?
Inevitable ...
I have never been a fan of Viking and they have done nothing to change my opinion by this merger ... if fact, they have distanced themselves from me even more by this move !!!
I guess it was inevitable that, once GE (supposedly) pulled their Appliance Division from the chopping block, LG would be looking for someone to buy ... and make no mistake ... "strategic alliance" aside, LG believes in every sinew of their being that they will own Viking some day !!!
... and if Viking is thinking of this great invasion of Viking products into China, they had better take stock and have a look @ the problems GOOGLE is having there and take heed !!!
Those who forget "Lucky GoldStar" delude themselves ... "Life's Good" my foot !!!
Viking & LG
The sad news is that it has come to this. Both these brands have had paths carved which never should have crossed. But, given the realities of the world, this shows that tough times call for tough decisions and alliances. The Viking Distributors certainly need something to sell. If they survived V ref units, they can handle any quality issues LG can throw out there.I look forward to seeing the Korean translations on the menus at the V hotel in Greenwood. Maybe that's the fit. After all, it is SOUTH Korea, ya'll.
Bad News....
Is Viking sacrificing their position in the US Market for a position in the Asian market? As a strong dealer of Viking products and an avid supporter of the brand I take this news as a disaster. If there is a way for a company to offer the worst customer service and support LG has found it. Obviously it would have been difficult to find out and keep their plans confidential, but why didn't Viking check into dealers relationships with LG? Or am I the only one experiencing problems with the brand. Specific problems: No parts available after a short life span, wrong light bulbs installed from factory causing interior meltdowns on refrigerators and blowing out boards that can't be replaced, washer drums flying apart and destroying everything in their path. Please........Have Mercy..........I love(d) the Viking brand but can't stand LG.
Huge news but I believe
Huge news but I believe everyone knew this was coming the writing was on the wall. Rumors usually come true in the business it was just a matter of time for this one to happen which I believe is good for both parties involved. Now the next one is with all the sharing going on will BSH North America sell to Electrolux the future look what happened in Brazil and where that CEO is now
Viking & LG
Last summer there was quite a bit of speculation that Viking was being sold to LG. If I recall correctly, one AA subscriber went so far as to post a comment claiming that his "inside sources" were 95% certain the sale would go through. Advisor quickly (and appropriately) added a comment that rumors were not "news" and shouldn't be regarded as such without hard evidence. It would appear as though the foundation of those rumors was nothing more than Viking & LG beginning discussions regarding a strategic alliance. Alliances are tricky and take time to negotiate, so I'm sure the principals were deeply involved in these discussions when those rumors began flying. (On the other hand, strategic alliances can often be a precursor to an outright acquisition.) This will be worth watching!
LG & Viking
Wow, Let the Asian invasion expand its grasp on the American Market. I'm so looking forward to how "Buy American" will spin this news.
Current Viking Fridge's built by the Amana plant now to be switched to LG build i wonder? Dish, under counter, ect... Built overseas or?