Report: Ripplewood concedes Maytag takeover

Report: Ripplewood concedes Maytag takeover
Date August 22, 2005
Section(s) Local News


The three-month bidding war for Maytag may come to an end today after sources close to Ripplewood Holdings said the private equity firm would not increase its offer to take control of 112-year-old Newton-based corporation.

The Wall Street Journal, citing “a person familiar with the matter,” said Ripplewood will stay with its $14 a share cash bid for Maytag, a deal valued at about $1.13 billion, not counting the nearly $1 billion in debt the firm agreed to assume.

Ten days ago, the Maytag board of directors voted to back Whirlpool’s revised $21 a share cash and stock offer saying it was a better deal from a financial standpoint to shareholders and is likely to pass regulatory scrutiny. In making the announcement Aug. 12, the board recommended that shareholders vote against the Ripplewood bid in light of Whilrpool’s $1.68 billion offer, not counting the assumption of Maytag debt.

Late last week, Maytag said it had notified Ripplewood of its decision in favor of Whirlpool, adding that it can terminate the agreement with the private equity firm if it makes a similar determination on or after today, taking into account any revised offer from Ripplewood. The Whirlpool offer remains open until noon on Tuesday.

Whirlpool’s acquisition of Maytag would create the world’s largest appliance manufacturer, accounting for nearly half of the U.S. market and nearly 80 percent of the North American laundry business. The Benton Harbor, Mich.,-based company raised its bid for Maytag three times since entering the bidding fray.

Whirlpool has agreed to provide Maytag $120 million should federal regulators block the merger. The company would also pay $15 million for the retention of Maytag employees and pay the $40 million break-up fee Ripplewood is entitled should Maytag‘s board terminate the deal.

Analysts covering the home appliance industry have said that Whirlpool would likely attempt to cut Maytag‘s expenses by shifting manufacturing to its offshore locations and merging other Maytag operations, like information technology, research and development, purchasing and distribution under Whirlpool’s platform.

Should the Ripplewood deal be terminated, the merger is expected to face strict federal regulatory scrutiny. In response, Whirlpool said it has secured support from nearly all of its top 20 retail customers and buying groups, including a voice of support from the CEO of Lowe’s, the nation’s No. 2 U.S. seller of home appliances.

Antitrust scrutiny is expected to take several months.

Ripplewood had been trying to acquire Maytag at least since December 2004, according to Securities and Exchange Commission filings. Its bids repeatedly fell after Maytag was unable to meet market targets. The Maytag board of directors approved the $14 a share takeover offer on May 19.


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