NEW YORK ( The Deal) -- Oreck will sell its assets to a rival vacuum cleaner maker after it beat out the son of Oreck's founder.
Oreck on Monday announced that Royal Appliance Manufacturing had won its auction earlier that day.
Oreck Acquisition Holdings was the stalking-horse bidder for the auction, offering $21.88 million, including $14.5 million in cash and the assumption of $7.38 million in liabilities. Oreck Acquisition is owned by Tom Oreck, the son of David Oreck, who founded the namesake debtor in 1963.
Oreck's statement did not disclose a winning purchase price, and a spokeswoman declined to provide any further details on the sale, other than that it is expected to close on July 24.Chief Judge Keith M. Lundin of the U.S. Bankruptcy Court for the Middle District of Tennessee in Nashville is scheduled on July 16 to consider approving the sale. Royal, based in Glenwillow, Ohio, makes the Dirt Devil vacuum brand, as well as the Royal and Regina vacuum brands. Royal is owned by Techtronic Industries of Hong Kong, which also owns the Hoover brand of vacuum cleaners and power tool brands including Milwaukee, AEG and Ryobi. According to its Web site, Techtronic on April 23, 2003, purchased Royal from its shareholders for $137.2 million and on Jan. 31, 2007, purchased Hoover from Whirlpool (WHR - Get Report) for $107 million. Techtronic shares closed Tuesday at HK$18.86 ($2.43) on the Hong Kong Stock Exchange, down HK$0.04. Oreck filed for Chapter 11 on May 6 with plans to sell its assets. The court on May 24 approved the bidding procedures for the sale, which set a July 1 deadline for rival bids. Competing bids had to be at least $24.132 million, with $16.75 million in cash. During the auction, bids had to increase in increments of at least $250,000, but Oreck had the option to increase the increment amount to $500,000. The stalking-horse bidder is entitled to an $800,000 breakup fee and up to $1.2 million in expense reimbursement for losing the auction. Oreck sells vacuum cleaners, steam mops, floor machines, air purifiers and other cleaning products for hotel and home use throughout the U.S., Canada and parts of Europe.