Whirlpool officially notifies regulators of intent to buy Maytag

Whirlpool officially notifies regulators of intent to buy Maytag
Date September 14, 2005
Section(s) Local News

AP Business Writer

GRAND RAPIDS, Mich. — Whirlpool Corp. has officially notified the Federal Trade Commission and the U.S. Department of Justice of its intent to purchase rival appliance maker Maytag Corp. in a cash-and-stock deal valued at more than $1.7 billion.

Whirlpool sent notification letters last week to both agencies because it is unclear at this point whether it will be the FTC or the Justice Department that will investigate possible antitrust concerns, Whirlpool spokesman Steve Duthie said Tuesday.

“Neither Justice nor the FTC has considered or ruled on a merger in the U.S. appliance industry for a long time — 15 to 20 years, I think,” Duthie said.

Once the regulators figure out which of them has jurisdiction, Benton Harbor-based Whirlpool will provide the investigating agency with more details about its planned acquisition of Maytag, he said.

Probably by the end of this month, Whirlpool will notify the Securities and Exchange Commission that it plans to issue new shares of stock to be given to Maytag shareholders as part of the proposed transaction.

Shareholders of Newton-based Maytag must approve the acquisition and will vote on the proposal before the end of the year, the company said last month. The agreement does not need the approval of Whirlpool’s shareholders.

The companies announced Aug. 22 that they had formally agreed for Whirlpool to acquire Maytag for $21 per share and assume $977 million of Maytag debt.

A combined Whirlpool-Maytag company would capture about 48 percent of the U.S. major-appliances market, analysts have estimated. General Electric Co. would have about 26 percent of the market and Sweden’s Electrolux AB would have about 20 percent.

Whirlpool-Maytag would control as much as 70 percent of the U.S. laundry market, a figure that analysts said would likely generate close government scrutiny.

Both companies have said they expect to close the deal during the first quarter of 2006, although some industry observers have said it may take longer to receive regulatory approval.

In Tuesday afternoon trading on the New York Stock Exchange, shares of Whirpool fell 86 cents to $78.24, while Maytag shares dropped 14 cents to $18.70.

In related news, China’s largest appliance maker, Haier , which considered a bid for Maytag in June, may still be interested in the company if its current deal with Whirlpool Corp. falls through, a Haier executive said on Tuesday.

“We were interested in the beginning. I can’t say we wouldn’t be interested in it again,” Michael Jemal, CEO of Haier America, told Reuters during the U.S.-China Executive Summit in New York City.

Jemal would not comment on why Haier abandoned its bid. Haier, with two private equity firms said it was interested in a joint bid of $16 per share, but the group abandoned the bid shortly after Whirlpool offered $17 a share.

New York private equity firm Ripplewood Holdings submitted the original bid of $14 per share, or $1.13 billion, in May. Maytag‘s board first backed Ripplewood, then changed course after Whirlpool’s substantially higher offer.

The Maytag-Whirlpool combination is likely to draw anti-trust scrutiny because of the total U.S. market share they would control.

Ripplewood has said that if regulators block the deal, the firm is still interested in buying the company, a stance that Haier’s Jemal echoed on Tuesday.

“(Haier) wasn’t interested in the (Maytag) brand, it was interested in the manufacturing assets in the U.S. and the broad depth of products that Haier does not have,” Jemal said.


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