Apollo To Buy Goodman

Goodman’s plants in Texas include the Houston Logistics Center, pictured above, where products are consolidated for shipment to distributors.
Goodman, the largest privately held air conditioning and heating equipment manufacturer in the United States, is being acquired by a private investment firm for approximately $1.43 billion.

Apollo Management L.P. signed a definitive agreement with Goodman on Nov. 18 under which Apollo will acquire Goodman.

"We are pleased to announce this important transaction with Apollo," said John B. Goodman, chairman of Goodman's board of directors. "We believe that our strong brand names and market-leading position, combined with Apollo's financial resources and extensive relationships, will further Goodman's position as a premier company in the heating, ventilation, and air conditioning industry."

Goodman continued, "On behalf of the members of the Goodman family, we are very excited about the prospect of partnering with such a well respected financial investor, as well as the existing management team, to continue providing value and quality to our customers and to propel growth into the future." Under the terms of the agreement, members of the Goodman family will retain a significant investment in the company. Also acquiring an interest in the new company are members of Goodman's senior management team. Following Apollo's acquisition, John B. Goodman will continue to serve on Goodman's board of directors. The senior management team, led by President and Chief Executive Officer Charles A. Carroll, will continue to serve in their current capacities.

Gary Clark, senior vice president of marketing for Goodman, said, "From an operating standpoint, that [board of directors change] will be the only change. Otherwise it is business as usual.

"The big motivation for the family was to diversify. This is typical of any business that is advised not to put all of their eggs in one basket. The family can convert a non-liquid part of the company to something that is much more liquid.

"We're hoping that the only difference [dealers] are going to see is us improving - and that is what we try to do anyway."

The Dayton, Tenn., plant pictured above manufactures evaporator coils and air handlers for Goodman-owned brands.
Goodman dealer Ben Stark of Stark Air, Euless, Texas, said, "I felt it was just a matter of time before Goodman changed hands. It was a debt-free company that was very well managed from a business standpoint. I feel the new owners will keep a hands-off policy, at least for the near future. It only makes sense. They have little or no HVAC background, and it looks like an investment buyout."

"We are excited to be partnering with the management team and are strong supporters of their current strategy for continued growth," said Larry Berg, a senior partner with Apollo.

"Goodman's leading market position and value proposition provide a compelling platform. Together with the continued experience and backing of the Goodman family, we look forward to helping the company further capitalize on the exciting opportunities that lie ahead."

The closing of the acquisition, which is expected to occur in the first quarter of 2005, is subject to obtaining approvals under the Hart-Scott-Rodino Anti-trust Improvements Act and other customary closing conditions for transactions of this nature.

Houston-based Goodman is considered the second-largest unit manufacturer of residential and light commercial heating and air conditioning products in the United States. Branded products manufactured and marketed by Goodman include Goodman®, Amana®, GmC®, Janitrol®, and QuietFlex®. The products are manufactured at plants in Texas and Tennessee and are sold through approximately 700 locations across North America.

Companies owned or controlled by Apollo or in which Apollo has or has had a significant equity investment include AMC Entertainment Inc., Educate Inc., General Nutrition Centers Inc., and Vail Resorts Inc.

Publication date: 11/29/2004

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