Archive for March, 2006

Maytag merger approved

March 30, 2006
Maytag merger approved
 
Date March 30, 2006
Section(s) Local News
Brief  
 
By Associated Press

and

Daily News Staff

WASHINGTON and NEWTON — Antitrust regulators on Wednesday approved Whirlpool’s proposed $1.79 billion purchase of Maytag, saying the merger would not reduce competition substantially.

The existence of strong rivals and the cost savings the new company would generate indicate “this transaction is not likely to harm consumer welfare,” the Justice Department said.

An investigation by the department’s Antitrust Division found that an effort by the new company to raise prices on its washers and dryers “likely would be unsuccessful” because at least five other companies are well-established in U.S. markets.

Those competitors include the Sears brand Kenmore, General Electric and Frigidaire. The Justice Department also concluded that LG and Samsung and other foreign manufacturers have quickly established themselves in recent years.

“LG, Samsung and other foreign manufacturers could increase their imports to the U.S.,” the department said in a statement. “Existing U.S. manufacturers have excess capacity and could increase their production.”

The government also concluded that large retailers including Sears, Lowe’s, The Home Depot and Best Buy have alternatives available to help them resist any attempt by the combined company to raise prices.

The cost savings and other efficiencies gained by the merger also should benefit consumers, the department said.

The companies had agreed not to close the transaction before today.

This morning, community members were still reacting to the news.

“We have prospered for over 100 years with Maytag. It our fervent hope and objective to continue to prosper with appliance manufacturing in Newton under the Whirlpool label.” State Sen. Dennis Black said in a released statement. “The Dept. of Justice has spoken… the process will continue. Now it behooves local government leaders to work diligently to retain the industry in Newton.”

Newton Mayor Chaz Allen said this morning that local officials already had prepared a list of things Iowa has to offer Whirlpool to keep jobs in state. Grants, the Iowa Values fund, training programs and other incentives head the list. Allen said Whirlpool wanted to wait until the deal closed before sitting down to discussions.

“We’re excited that we have someone to work with now,” Allen said “It’s just a matter of waiting until they sign on the dotted line and then we can talk to them.”

Reuters interviewed Whirlpool Chairman and Chief Executive Jeff Fettig shortly after the U.S. Justice Department approved the combination of the two companies

“We expect to close no later than Monday, April 3,” Fettig said.

After that, Allen expects meetings to being in earnest. He hopes officials can convince Whirlpool to keep Maytag jobs in Iowa.

Maytag and Whirlpool released a joint statement about the decision.

“We are pleased with the Department of Justice’s decision and look forward to closing the transaction, and begin the intergration of our business,” Fettig said. “The combination of Whirlpool and Maytag will create substantial benefits for consumers, trade customers and shareholders through continued development of innovative products, improved quality and service and cost efficiencies.”

“Our merger with Whirlpool provides fair value to Maytag shareholders,” Maytag chairman and CEO Ralph Hake said. “This transaction will enhance the competitiveness of the Maytag brands with new innovation and greater global reach to a broader base of consumers through Whirlpool’s established sales and manufacturing capabilities.”

Reaction to the announcement by local residents at the Mid-Town Cafe was mainly optimistic this morning.

“So be it. Now that this long-lasting controversy is over, let’s get back to the business at hand,” said John McNeer, a former Maytag employee. “We still have a good future.”

Jerry Castonguay said the ruling by the Justice Department was unexpected.

“It was a little bit of a surprise,” he said. “I thought the share of the market would require them (Whirlpool) to divest themselves of the top-loading machines.”

Some analysts and antitrust lawyers had expected the Justice Department to object to the deal. The merger would create a company producing half of the dishwashers in the United States and more than 70 percent of the clothes washers and dryers.

Such a rise in market concentration has typically drawn a challenge from the government.

Whirlpool, based in Benton Harbor, Mich., is the largest appliance manufacturer in the United States. Maytag is number three, behind GE Consumer products.

The antitrust division has been reviewing the proposed merger since September. The companies announced that they had signed a definitive merger agreement in August.

The government asked for more time to review the merger last month, prompting wide speculation that it was preparing to challenge the deal.

Whirlpool offered to pay $21 a share for Maytag. Including the assumption of $977 million of Maytag debt, the entire deal is valued at about $2.7 billion.

Whirlpool won a bidding match last summer that included a $14 per share bid by New York investment firm Ripplewood Holdings and investment partners. China’s Haier America, backed by Bain Capital and Blackstone Group had bid $16 per share to acquire Newton, Iowa-based Maytag, whose brands include Maytag, Amana, Hoover, Jenn-Air and Magic Chef.

Whirlpool racheted up the bidding from its initial $17 offer to $21 to entice Maytag away from the Ripplewood group. Maytag initially expressed concerns about whether a merger with Whirlpool would get federal approval, but signed an agreement after Whirlpool offered to pay a $40 million termination fee to get Maytag out of its agreement with Ripplewood.

Maytag shares rose $4.73, or 27.7 percent, to close at $21.81 on the New York Stock Exchange Wednesday. Shares were down a little to $21.52 in early trading, but still remained above the $21-per-share offer from Whirlpool.

Whirlpool shares gained $6.38, or 7.1 percent, to close at $95.95 on Wednesday.

UAW president Ted Johnson declined to comment on the merger this morning.

——

Daily News reporters John Jennings and Andy Karr and AP reporters Mark Sherman and David Pitt contributed to this story.

Breaking News: Whirlpool-Maytag merger approved by Justice Department

March 29, 2006
BREAKING NEWS: Whirlpool-Maytag merger approved by Justice Department
 
Date March 29, 2006
Section(s) Local News
Brief  
 
By MARK SHERMAN

Associated Press Writer

WASHINGTON — Antitrust regulators on Wednesday approved Whirlpool Corp.’s proposed $1.79 billion purchase of Maytag Corp., saying the merger would not reduce competition substantially.

The existence of strong rivals and the cost savings the new company would generate indicate “this transaction is not likely to harm consumer welfare,” the Justice Department said.

An investigation by the department’s Antitrust Division found that an effort by the new company to raise prices on its washers and dryers “likely would be unsuccessful” because at least five other companies are well-established in U.S. markets.

The companies had agreed not to close the transaction before Thursday.

Some analysts and antitrust lawyers had expected the Justice Department to object to the deal. The merger would create a company producing half of the dishwashers in the United States and more than 70 percent of the clothes washers and dryers.

Such a rise in market concentration has typically drawn a challenge from the government.

Whirlpool, based in Benton Harbor, Mich., is the largest appliance manufacturer in the United States.

Maytag, based in Newton, Iowa, is number three, behind GE Consumer products.

Maytag Corp., Whirlpool shares fall on presumed antitrust challenge

March 20, 2006
Maytag Corp., Whirlpool shares fall on presumed antitrust challenge
 
Date March 20, 2006
Section(s) Local News
Brief  
 
By DAVID PITT

AP Business Writer

DES MOINES — Shares of Maytag Corp. and Whirlpool Corp. fell Friday as industry analysts and antitrust attorneys speculated that a federal government challenge to the proposed merger was coming.

Benton Harbor, Mich.-based Whirlpool has proposed a $1.79 billion acquisition of rival Maytag.

The U.S. Department of Justice antitrust division sought an extension of time to review the merger last month. The companies have agreed not to close the transaction before March 30.

A leading antitrust lawyer said a decision is likely to come next week.

The heightened speculation drove stock prices for both companies lower Friday. Maytag shares dropped $1.23, or 6.9 percent, to close at $16.71 on the New York Stock Exchange. Whirlpool shares fell $1.29, or 1.5 percent, to $86.25.

Steven C. Sunshine, a supervisor of the DOJ’s antitrust division’s merger enforcement program from 1993-1995, said antitrust attorneys have expected the government to challenge the deal because it concentrates so much power in one company.

“I think this is a merger that on true antitrust principles raises real concerns,” said Sunshine, who is now head of the antitrust practice at the New York law firm of Cadwalader, Wickersham & Taft.

The merger would create a company producing half of the dishwashers in the United States and more than 70 percent of its clothes washers and dryers. Under long-standing federal guidelines, a rise in market concentration of that magnitude would usually draw a court challenge.

Antitrust attorneys have sought sworn statements from business rivals and customers as they review the proposed deal, which received the approval of Maytag‘s shareholders in December.

The Competition Bureau of Canada, an independent law enforcement agency, concluded on Tuesday that it had no grounds upon which to challenge the proposed merger under Canada’s Competition Act.

Sunshine said it appears the U.S. Department of Justice antitrust staff has made a recommendation to challenge the merger to Tom Barnett, who heads the division. Barnett will make the final determination about whether the government challenges the merger in court.

If it does, the companies have the option of fighting a lengthy court battle, abandoning the deal or agreeing to sell off parts of the business to allay government concerns.

If Whirlpool chooses to walk away, it must pay the Newton-based Maytag $120 million.

Prudential Equity Group analyst Nicholas Heymann said he believes the DOJ will oppose the merger “based on the potential for anticompetitive pricing by the merged entity.”

In a March 17 research note to investors, he speculated that the merger only makes economic sense for Whirlpool if the company increases the price of some washers and dryers to help boost profits.

A Whirlpool spokesman didn’t immediately return calls Friday. CEO Jeff M. Fettig said Tuesday that the merger “will result in better products, quality and service, as well as cost efficiencies, which will enhance our ability to succeed in the competitive global home-appliance industry.”

A Maytag spokesman declined to comment.

Canadian regulators OK Maytag buyout

March 15, 2006
Canadian regulators OK Maytag buyout
 
Date March 15, 2006
Section(s) Local News
   
 
(AP) — Government regulators in Canada have approved Whirlpool’s proposed purchase of appliance rival Maytag Corp.

The Competition Bureau of Canada, an independent law enforcement agency, concluded Tuesday that it has no grounds to challenge the proposed merger under Canada’s Competition Act.

“The issue for us is whether or not the merger is likely to substantially lessen competition and we determined that the merger is not likely to result in a substantial lessening of the competition in Canada,” said Robert Lancop, assistant deputy commissioner of competition. “There’s a number of factors we look at like barriers to entry, effective competition remaining and foreign competition.”

Benton Harbor, Mich.-based Whirlpool has proposed a $1.79 billion acquisition of Maytag, which is headquartered in Newton.

In another development, Newton production workers were notified on Monday that the plant would close for a week later this month.

Workers were notified that Plant 2 would be shut down the week of March 27 with production to resume April 3.

The U.S. Department of Justice sought an extension of time to review the merger last month. The companies have agreed not to close the transaction before March 30.

“We believe the bureau’s decision recognizes that the global home-appliance industry is open and competitive,” said Jeff M. Fettig, Whirlpool’s chief executive officer. “This transaction will result in better products, quality and service, as well as cost efficiencies, which will enhance our ability to succeed in the competitive global home-appliance industry.”

Maytag CEO Ralph Hake said the decision reinforces the idea that the merger is “pro-competitive and is certainly in the best interest of our company, our brands and our shareholders.”

But some industry analysts have expressed doubts about whether the deal will be approved by the Department of Justice.

The merger would create a company producing half of the dishwashers in the United States and more than 70 percent of its clothes washers and dryers. Under long-standing federal guidelines, a rise in market concentration of that magnitude would usually draw a court challenge.

Antitrust attorneys have sought sworn statements from business rivals and customers as they review the proposed deal, which received the approval of Maytag‘s shareholders in December.

“Our investigation is ongoing,” said DOJ spokeswoman Gina Talamona.

Shares of Maytag rose 40 cents, or 2.3 percent, to close at $17.91 on the New York Stock Exchange on Tuesday. The stock price continued to inch up today rising 15 cents to $18.06 in morning trading. The level is well below the $21 in cash-and-stock price that Whirlpool said last summer it would pay for the appliance maker. Whirlpool shares rose $1.71, or 2 percent, to $88. It was up another 25 cents this morning.

The Newton Daily News contributed to this story.

Hake’s house sells

March 14, 2006
Hake’s house sells
 
Date March 14, 2006
Section(s) Local News
Brief  
 
By DAVID PITT

Associated Press Writer

The house built for Maytag Corp. chief executive Ralph Hake has been sold by the real estate company that listed it.

The 4,200-square-foot brick home located on nearly two acres in Newton was listed for $759,900.

Surrounded by 10 gardens and two patios, the 4,200 square feet of above-ground living space includes three fireplaces and cherry woodwork, floors and cabinets, a formal dining room, family room and a den, according to Iowa Realty’s listing. There are four bedrooms, 31/2 baths, two custom outdoor patios and a six-car garage.

The house also has a 3,200-square-foot poured concrete basement. It is assessed for tax purposes at $533,970. The annual tax bill is about $10,000.

Hake and his wife, Robin, had the home built in 2001, when Hake was named chairman and chief executive of Maytag.

The buyer gets to keep the dishwasher, microwave, refrigerator and stove.

Maytag officials confirmed in October that Hake had put his house on the market, calling it a “personal family decision.”

Maytag is in the process of being bought by rival Whirlpool Corp. — Hake’s former employer — 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.

Justice Department officials are reviewing the antitrust implications of the deal and asked last month to have until March 30 to study it.

Some industry analysts have serious doubts about whether the deal would be approved and some questioned the need for Newton’s Maytag corporate headquarters if the deal with Benton Harbor, Mich.-based Whirlpool goes through.

Hake’s home was listed as sold on Monday on the Web site for the West Des Moines-based Iowa Realty Inc.

Real estate agent Mary Kay Mickelson said she showed the house about a dozen times and the buyer is a Des Moines resident, who was attracted to the Newton community and the house itself.

She declined to identify the buyer. Officials with the Jasper County Recorder’s Office said today that no deed information on the sale has been filed.

Renew Newton commissions Ol’ Lonely sculpture

March 8, 2006
Renew Newton commissions ‘Ol’ Lonely’ sculpture
 
Date March 08, 2006
Section(s) Local News
   
 
Special to the Daily News

Renew Newton, a community betterment group affiliated with the Jasper Community Foundation, has announced the commissioning of local sculpture artist Nick Klepinger to create a bronze life-sized sculpture depicting Maytag‘s advertising icon “Ol’ Lonely” sitting on a bench, including a young boy and Bassett hound, “Newton.”

The commission has been made possible through the collaboration of the Maytag Corporation Foundation, the Iowa Sculpture Festival and the Arts Connection of Jasper County.

The Renew Newton group is anxious to accomplish two important objectives for the future of Newton in commissioning this work.

The first, the group said, is to preserve the image of quality and dependability that characterized Maytag products and workers during the past decades.

The second goal is to identify with the Iowa Sculpture Festival (IFS) that is now in its fourth year. There are now more than 35 pieces of sculpture in Newton and over the years there is an expectation of adding many more. Sculpture is hoped to become an identifying feature for the city and be the basis for attracting visitors for tours.

“I have been selected to do a number of important sculptures over the years, but none has excited me more than the prospect of creating a sculpture of the Lonely Repairman,” Klepinger said. “It is part of me, my family and the community where Linda, my wife, and I spent our lives and practice our art forms. I am grateful to have been selected and pleased with the confidence that Renew is placing in my artistic ability to create something very special for Newton.”

It is expected to take several months before the project is complete — perhaps as late as the fall of this year. The site selected for the finished sculpture will be Maytag Park, but just where in the park has not been finally decided upon.

“The Maytag Corporation Foundation is proud to be a partner with Renew Newton, the Iowa Sculpture Festival and the Arts Connection of Jasper County on this unique project,” said Michele Walstrom, director, internal communication and community relations for Maytag. “Maytag‘s Ol’ Lonely Repairman is a character that people from all over the world recognize as a long-standing symbol of dependability. Since Newton is the ‘home of Maytag‘ it is only fitting that Ol’ Lonely become a part of the community’s public art collection for residents and visitors to enjoy.”

Maytag’s All Brand president leaves company

March 7, 2006
Maytag’s All Brand president leaves company
 
Date March 07, 2006
Section(s) Business
Brief  
 
David McConnaughey has left his upper management position at Maytag Corp., to assume a new position with Federal Signal Corporation in Oak Brook, Ill.

Federal Signal announced on Monday that McConnaughey, 49, has been appointed president, safety products group, effectively immediately.

McConnaughey was president, All-Brand Service, Maytag Corporation’s home appliance repair unit prior to taking the position with Federal Signal.

Federal regulators are currently reviewing Whirlpool Corporation’s $1.7 billion buyout of Maytag.

Hoover workers consider making bid for company

March 1, 2006
Hoover workers consider making bid for company
 
Date March 01, 2006
Section(s) Local News
Brief  
 
NORTH CANTON, Ohio (AP) — The union representing Hoover Co. employees is proposing that the employees buy the troubled floor-care manufacturer.

Local 1985 of the International Brotherhood of Electrical Workers has retained two advisory firms to help it put together a bid for Hoover, which makes vacuum cleaners and other products for cleaning floors. The local represents about 1,000 employees.

“These jobs are simply too important to our members and to our communities for us to stand still and wait for others to determine our fate,” said Jim Repace, the local’s president.

An additional 1,800 nonunion hourly employees in Juarez, Mexico, and El Paso, Texas, also could be part of the buyout, he said.

The U.S. Justice Department is reviewing Whirlpool Corp.’s proposed $1.79 billion acquisition of rival appliance-maker Maytag Corp., which owns Hoover.

Maytag said in February that it is looking at options for the Hoover, including a sale. Maytag spokesman John Daggett had no comment about a possible Hoover employees’ bid.

Repace said the union has retained Christopher Mackin, of Ownership Associates Inc. in Cambridge, Mass., and Richard May, of Duff & Phelps Securities in Chicago, to help form an acquisition company to make a bid and a business plan that would include an equity partner.