Report: Whilrpool faces antitrust fight over Maytag takeover

Report: Whirlpool faces antitrust fight over Maytag takeover
 
Date February 13, 2006
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

The Wall Street Journal reported today that Whirlpool may be facing a court challenge to its proposed takeover of Maytag to prevent the combined companies from dominating the nation’s home appliance market.

The paper said the Justice Department has yet to decide whether to file a case and that the merger may still be cleared but is beginning to seek sworn statements from competitors and customers to prepare a request for court injunction to block the merger. The newspaper cited “people close to the case” in sourcing the story.

Shares of Maytag stock have fallen over the past week losing 3.1 percent of their value on Friday to close at $16.21, down 51 cents for the day. The stock continued to fall today on The Wall Street Journal report. In the first hour of trading, the stock had fallen another 46 cents to $15.75.

The price is well below the $21 cash and stock offer Whirlpool has made for the 112-year-old Newton-based company.

Critics of the merger point to the 70 percent concentration level the combined companies would have in the U.S. laundry market and the 50 percent marketshare the companies would have in dishwashers. U.S. Sen Tom Harkin and Rep. Leonard Boswell previously wrote to the Justice Department seeking to block the merger or force Whirlpool to divest itself of Maytag‘s laundry unit. A Washington, D.C.-based pro-competition watchdog group also has written to oppose the merger.

The newspaper said that under federal guidelines, a rise in market concentration like the Whirlpool-Maytag deal would usually draw a court challenge.

Maytag, Whirlpool and Justice Department officials declined to comment for the story, the newspaper said.

In August, the Maytag board of directors approved the Whirlpool offer over the $14 per share offer made by Ripplewood Holdings. Whirlpool paid the $40 million breakup fee included in the Ripplewood takeover agreement.

Should the Justice Department force a divestiture, the Whirlpool contract with Maytag allows it to rewrite or end the merger.

The contract also calls for Whirlpool to pay Maytag $120 million in a reverse breakup fee if the deal fails to receive federal regulatory approval.

Maytag and Whirlpool have agreed not to close the deal prior to Feb. 27 to give the Justice Department to complete its investigation.

In related news, Maytag on Friday announced a quarterly dividend of 9 cents a share on the firm’s common stock.

In the event the pending merger with Whirlpool is not completed prior to the record date of March 1, the dividend is payable on March 15.

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