Justice to extend Maytag-Whirlpool merger review

Justice to extend Maytag-Whirlpool merger review
 
Date February 14, 2006
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

The U.S. Justice Department will extend its review of Whirlpool’s proposed $1.7 billion buyout of appliance-maker rival Maytag, the companies announced in a joint statement late Monday.

Maytag and Whirlpool said they have agreed with the Justice Department’s Antitrust Division to extend the review until March 30. The companies have agreed not to close the deal until that time without Justice approval.

Whirlpool’s chief executive said he was not surprised by the need for additional time to review the proposed acquisition due to the complexity of the issues involved.

“We appreciate the work of the Department of Justice staff to date and will continue to work with them cooperatively as they complete their review,” said Jeff Fettig, Whirlpool’s chairman and CEO. “The agreed upon extension is simply a continuation of the review process. This is a complex and rapidly changing industry, and it is not surprising that some additional time is required to fully understand and fairly evaluate it.”

On Monday, the Wall Street Journal reported that the Justice Department may be preparing to block the merger over concerns of the combined company’s dominance over the home appliance market. The paper said federal regulators were beginning to seek sworn statements from competitors and customers on the potential impact of the merger. However, the paper said no decision on what action to take had been made and the deal still could go through.

If approved, the combined companies would control as much as 70 percent of the U.S. laundry market and as much as 50 percent of the dishwasher home appliance category.

Whirlpool and Maytag officials contend market pressures from foreign competitors in the appliance industry overstate the concentration levels critics state in opposing the merger.

“We strongly believe that the combination will create substantial benefits for consumers, trade customers and our shareholders,” Fettig said in the prepared statement on Monday. “This transaction will translate into better products, quality and service, as well as other efficiencies that will allow us to offer a more competitive, wider range of products to a much broader consumer base in the highly competitive global home appliance industry.”

Maytag stock rollercoastered on the report falling to a low of $15.50 before rebounding to close 40 cents higher at $16.61. In early trading today, Maytag was trading 22 cents down at $16.39 while Whirlpool was up 32 cents at $86.15.

Last August, Whirlpool outbid two other Maytag suitors, Qingdao Haier and Ripplewood Holdings, with its $21 cash and stock offer. In December, the companies said they had certified substantial compliance with federal regulators reviewing the merger and said they would not close the deal prior to Feb. 27, without the Justice Department’s approval.

Should the Justice Department act to block the merger or force a divestiture of some of Maytag‘s assets, the merger agreement allows Whirlpool to walk away from the agreement by paying Maytag a $120 million reverse break-up fee.

Maytag CEO Ralph Hake said he believes the merger will be completed.

“We believe this additional time will be sufficient for the review to be completed, and we are confident that the acquisition will close rapidly upon completion of the review,” he said.

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