Justice Department to review Maytag-Whirlpool merger

Justice Department to review Maytag-Whirlpool merger
 
Date September 27, 2005
Section(s) Local News
Brief  
 
By DAVID PITT

AP Business Writer

DES MOINES (AP) — The antitrust division of the Department of Justice will be the agency investigating the proposed Whirlpool Corp. purchase of Maytag Corp.

Such mergers must be investigated and approved by either the Department of Justice or the Federal Trade Commission. Both agencies conduct investigations into antitrust matters and which one takes on a case usually depends on which has the most experience with the particular industry in question.

Both agencies had expressed interest in the looking into the proposed purchase. Resolution of the issue was announced Monday by Gina Talamona, a DOJ spokeswoman.

Steven C. Sunshine, a supervisor of the DOJ’s antitrust division’s merger enforcement program from 1993-1995, said he had heard rumblings between the agencies on the Whirlpool-Maytag deal.

“They both like to take cases that they think are interesting, high profile and will get them good experience,” he said. “The fact that the two agencies are having a clearance dispute over the merger signifies that both agencies think it’s an interesting deal, and they want to look at it.”

Sunshine, who is now head of the antitrust practice at the New York law firm of Cadwalader, Wickersham & Taft, said a quick resolution was necessary because requests for certain information must be filed within 30 days of the notification of the proposed merger.

Whirlpool, the nation’s largest appliance manufacturer, notified the federal agencies early this month of its intention to by Maytag, the third largest.

Justice department officials will make a formal request of the two companies for information about the deal.

Maytag shareholders must approve the acquisition and will vote on the proposal before the end of the year. No date has been set. The agreement does not need the approval of Whirlpool’s shareholders.

Benton Harbor, Mich.-based Whirlpool has offered to buy Maytag for $1.79 billion, or $21 a share. Including the assumption of $977 million of Maytag debt, the entire deal is valued at about $2.7 billion.

Both companies have said they expect to close the deal during the first quarter of 2006, although some industry analysts have said regulatory approval is likely to take much longer because it will concentrate a large percentage of the appliance industry in one company.

About 72 percent of washing machines and half the dishwashers bought in the United States would be made by Whirlpool or Maytag. Overall, Whirlpool would have about 48 percent of the market share in major appliances, far ahead of General Electric, which has about 26 percent and Electrolux, with about

20 percent.

Whirlpool executives have said they are so confident of approval, they will pay Maytag $120 million if regulators block the deal.

Regulators could require one or both companies to sell off portions of their business before giving the deal approval or could prohibit it.

Whirlpool shares closed 15 cents lower at $72.99 on the New York Stock Exchange. Maytag closed 1 cent lower at $17.80.

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