Shareholders to vote on Maytag sale

Shareholders to vote on Maytag sale
 
Date December 21, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

Shareholders are nearly certain to approve the sale of long-struggling Maytag Corp. to rival home appliance manufacturer Whirlpool on Thursday which means the end of the Newton-based company’s 112-year run as an independent company.

A special shareholder meeting to vote on the proposed sale of Maytag is scheduled for 10:30 a.m. Thursday at the Sodexo DMACC Conference Center, a former Maytag warehouse converted to a higher education facility with significant help from the Fortune 500 company.

In late August, the Maytag board of directors voted to throw in the towel on continued independent operation of the U.S. appliance icon after years of dismal financial results. Maytag became the subject of a bidding war after the board of directors initially approved the company’s sale to Ripplewood Holdings in late May. That $14 a share offer brought unsolicited bids from China-based Haier and eventually led to Whirlpool’s entry into the fray and its winning bid.

The meeting on Thursday is expected to be short, but bittersweet.

John Daggett, Maytag‘s corporate spokesperson, said he expects the meeting to be “very short,” lasting no longer than 15 minutes.

“There’s only one major proposal, but it’s more of a procedural meeting,” Daggett said. “There may be a preliminary announcement of the vote total (at Thursday morning’s meeting), but there will be a final tally later in the day.”

While Maytag shareholder approval is nearly certain, the U.S. Department of Justice still needs to give its assent for the merger to move forward. The Justice Department is still reviewing the buyout offer, which upon completion would make Whirlpool the world’s largest home appliance manufacturer. Both Maytag and Whirlpool said no final takeover will be completed prior to Feb. 27, 2006, although the need for additional review by federal authorities may delay that target date.

Analysts are split on the eventual outcome of the Justice review. Some believe the combination of the two companies, which would give Whirlpool as much as a 70 percent share of the U.S. washing machine market, could lead federal officials to require a partial divestiture of Maytag assets. Others believe the Justice Department will view the merger in the broad global context of appliance industry competition and allow it to move forward.

Maytag shareholders are being offered $21 for the approximate 80 million outstanding shares in a stock and cash offer valued at $1.7 billion. In addition, Whirlpool will assume nearly $1 billion in Maytag debt.

Maytag has struggled in recent years due to the onslaught of global competition. Foreign competitors, and American manufacturers that have been able to take better advantage of the economies of low-cost production operations, have continued to drive appliance pricing points below Maytag‘s ability to remain competitive. The company has also been hurt by the loss of retail floor space to market its brands, health costs, pension benefits and product litigation issues. For the third quarter 2005, Maytag reported a loss of $18 million.

Home appliance analysts say Maytag shareholder approval of the sale to Whirlpool just three days before Christmas could put a lump of coal in Newton’s economy. Speculation by analysts, although not backed by any formal company statements, is that a successful merger will likely mean the demise of Maytag corporate headquarters in Newton and the potential loss of local production operations. That could mean the loss of as many as 2,000 current local jobs. In proxy statements prepared for the sale, Maytag has identified the prospects of closing its Newton, North Canton, Ohio, and Florence, S.C., facilities in its future financial forecasts. The pending closure of the Florence facility was announced last month.

The demise of Maytag in Newton will bring to an end a company started as a farm implement company in 1893 and later named after one of the company’s founding members, F.L. Maytag. The Parsons Band Cutter and Self Feeder Company produced an accessory for threshing machines, but later moved into the production of washing machines due to the seasonal nature of the farm industry. The company’s first model, the Pastime, was introduced in 1907. Its second model, the Hired Girl, followed in 1909, the same year Maytag assumed full ownership of the company and gave it his name.

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