Waterford Wedgwood to pay $110m for US cookware firm

Waterford Wedgwood has signalled a major expansion into the US cookware market, announcing that it will buy All-Clad for $110 million (€104 million). The group said the acquisition was the next step in creating the world's largest "luxury living" business.

Waterford's chief executive, Mr Redmond O'Donoghue, said the acquisition of the Pennsylvania-based firm would give the group a stake in the fast-growing US premium cookware market, and allow its crystal and ceramics products access to All-Clad's distribution base.

Because 97 per cent of AllClad's sales were in the United States, he added, there was significant opportunity for expanding the brand in Europe and Asia. AllClad's products would be introduced into Europe next year, he said.

Mr Richard Barnes, Waterford's group finance director, said All-Clad, with sales of $52 million in 1998, would push group sales over £600 million (€762 million), and raise the proportion of group sales in North America, currently at 38 per cent of total turnover. Europe currently accounts for 46 per cent of sales; Asia 14 per cent.

He said All-Clad's pots and pans were manufactured through a unique process which sandwiched metal in layers, and therefore conducted heat more uniformly. This process was patented in the US until 2001, he added.

Mr O'Donoghue said Waterford Wedgwood was responding to changes in lifestyle trends, where younger consumers had come to regard cooking as "almost a participative activity".

"The kitchen has become a social gathering place for entertainment, and a meal is more than a meal, it is an experience," he said. "Each saucepan has to cook well, but also look well - it has to be aesthetically pleasing."

He said he was not concerned about the patent running out after next year, because Waterford was especially good at branding.

In the US, All-Clad is endorsed by several "celebrity chefs", including Ms Martha Stewart, Waterford said. Some 60 per cent of its sales are through the top 10 stores, such as Bloomingdale's and Macy's.

In a statement, the group's chairman, Dr Tony O'Reilly, said the acquisition was a significant and forward-thinking step, further increasing its US presence and moving the group closer to "luxury living" status.

"I firmly believe the luxury cookware is largely untapped and that consumers will be looking to enhance their homes with a premium product - that is what we have acquired," Dr O'Reilly added.

Also in the statement, Waterford noted that current trading continued to be in line with expectations and forecast faster sales growth and improved margins.

In March, the group announced flat annual pre-tax profits as the Asian crisis shattered results at Wedgwood china but said its restructuring programme, including plant closures at Germany's Rosenthal, meant it was well positioned for growth.

In 1998, pre-tax profit before exceptional items totalled £40.2 million, fractionally up from £40 million a year earlier, on group sales of £575 million, up 38 per cent.

All-Clad posted operating profits of $9.7 million in 1998 and sales over the last five years have more than trebled, Waterford said. The company employs 300 people in two factories in Pittsburgh, and is currently controlled by US Equity Partners, LP, the private equity affiliate of Wasserstein Perella. The company's management holds a significant minority stake.

The sale is due to be completed by June 21st.