Canadian regulators OK Maytag buyout

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.

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