A leading hot tub maker has purchased the assets of another spa manufacturer.
Watkins Manufacturing recently announced the acquisition of Ontario, Calif.-based American Hydrotherapy Systems in a transaction finalized Dec. 16. The purchase, whose details were undisclosed, allows Watkins to add AHS’ rotationally molded Freeflow Spas line to its portfolio.
“We’ve been very impressed with the product offering developed by, and the integrity of, the AHS team,” said Steve Hammock, president of Watkins Manufacturing in Vista, Calif. “The addition of Freeflow Spas to our family of quality hot tub brands fits perfectly with our consumer strategy to deliver the right products to the right markets at the right prices.”
Throughout early 2012, AHS’ business operations will transition to the Watkins worldwide headquarters in Vista, as the two companies work to integrate their activities. AHS currently operates a 57,000-square-foot manufacturing facility in Ontario, which the company will continue to use in the near future — with the understanding that all manufacturing will ultimately be centered at Watkins’ Vista facility.
These transitions were met with excitement among Watkins dealers — as well as dealers of Freeflow Spas, who speak highly of AHS’ existing support network. “They always give 100 percent,” said Paul Saba, owner of Laguna Hot Tubs in Marina Del Rey, Calif. “If I’ve got a complaint, they take care of me immediately.”
Alice Cunningham, owner of Olympic Hot Tub Co., a dealer of both Freeflow Spas and Hot Spring in the greater Seattle area, said it’s a “great move” for Watkins. Thanks to Freeflow’s Plug ‘N’ Play capability, the manufacturer now will be able to target potential consumers who previously could not purchase a spa because of construction restrictions imposed by their landlords, she explained. Cunningham said she recently sold a unit to a member of the U.S. military who bought it specifically because he could use it without making changes to his home on a nearby base.
The acquisition of one spa manufacturer by another is an unusual occurrence — but because Watkins aims to enter the entry-level spa niche as quickly as possible, Hammock said it made more sense to purchase a company already in operation than to launch a new division.
“It’s easier to fast-track your growth plan when you can find a company whose business stream fits neatly with your own consumer strategy,” he said. “From a strategic standpoint, it made sense to hit the ground running.”
Roto-molded spas are generally associated with the more entry-level end of the market — a niche that Hammock and the rest of Watkins’ leadership team expect to serve as an ideal complement to the premium spas on which the company has built its reputation.
Though AHS was not openly on the market, company executives say Watkins made the company’s board an attention-getting offer. “Over the years, many other companies have approached us,” said Bob Gawlik, general manager. “But Watkins was the first suitor that we believed would perpetuate what we have worked so hard to build in a manner we think will honor the company’s values.”
Watkins Manufacturing is a division of Masco Corp., a Fortune 500 company. The company was founded in 1977, and has dealers in all 50 states, as well as more than 60 countries.
The AHS brand Freeflow Spas was founded as Free Flow Products Inc. in 1967, and has since been devoted to creating a wide range of plastic products for the business and consumer markets.
Editor’s note: Erin Ansley contributed to this article.