Blaine Kitchenware

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rP os t 4040 OCTOBER 8, 2009 TIMOTHY LUEHRMAN JOEL HEILPRIN op yo Blaine Kitchenware, Inc.: Capital Structure On April 27, 2007, Victor Dubinski, CEO of Blaine Kitchenware, Inc. (BKI), sat in his office reflecting on a meeting he had had with an investment banker earlier in the week. The banker, whom Dubinski had known for years, asked for the meeting after a group of private equity investors made discreet inquiries about a possible acquisition of Blaine. Although Blaine was a public company, a majority of its shares were controlled by family members descended from the firm’s founders together with various family trusts. Family interests were strongly represented on the board of directors as well. Dubinski knew…show more content…
Competition from inexpensive imports and aggressive pricing by mass merchandisers limited industry dollar volume growth to just 3.5% annually over that same period. Historically, the industry had been fragmented, but it had recently experienced some consolidation that many participants expected to continue. In recent years, Blaine had been expanding into foreign markets. Nevertheless in 2006, 65% of its revenue was generated from shipments to U.S. wholesalers and retailers, with the balance coming from sales to Canada, Europe, and Central and South America. The company shipped approximately 14 million units a year. op yo There were three major segments in the small kitchen appliance industry: food preparation appliances, cooking appliances, and beverage-making appliances. Blaine produced product for all three, but the majority of its revenues came from cooking appliances and food preparation appliances. Its market share of beverage-making appliances was only 2%. Most of BKI’s appliances retailed at medium price points, at or just below products offered by the best-known national brands. BKI’s market research consistently showed that the Blaine brand was well-known and well-regarded by consumers. It was associated somewhat with “nostalgia” and the

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