Whirlpool’s Chief Touts Maytag Offer
Whirlpool Corp.’s top executive fired the first salvo in a possible three-way bidding war for rival Maytag Corp., saying Monday his company’s more than $1.3-billion offer provides the “best opportunity to address Maytag’s needs.”
Jeff M. Fettig, chairman and chief executive of the nation’s largest appliance maker, also expressed confidence that potential antitrust challenges could be surmounted.
The North American appliance market is “very open and competitive,” Fettig said during a teleconference with industry analysts. “The combination would actually improve the competitiveness in our industry by setting higher standards for innovation, efficiency and customer service.”
Whirlpool’s $17-a-share offer tops a $14-a-share proposal that the board of Newton, Iowa-based Maytag accepted from an investment group, Triton Acquisition Holding Co., on May 19. A month later, Maytag said it also was considering a preliminary $1.28-billion bid from Chinese appliance maker Haier America, along with Bain Capital and Blackstone Group, that valued Maytag at $16 a share.
Executives at Maytag, whose brands include Maytag, Amana, Hoover, Jenn-Air and Magic Chef, said that directors would consider the bid from Whirlpool. But the company said directors had not changed their recommendation that shareholders approve the proposal from Triton, an entity organized by the New York investment company Ripplewood Holdings.
A Ripplewood spokesman declined to comment on Whirlpool’s offer. Officials at New York-based Haier America could not be reached for comment.
Maytag, the nation’s third-largest appliance manufacturer behind Whirlpool and General Electric Co., has been squeezed in recent years by increasing steel and fuel costs, slipping profitability, sliding stock value and intense competition from Asian manufacturers such as LG Electronics and Samsung, both South Korean companies.
Best Buy dropped Maytag as a major appliance supplier in January.
Maytag eliminated 1,100 salaried workers and closed an Illinois refrigerator plant last year.
It faces the prospect of closing two more factories -- the flagship laundry appliance plant in Newton, Iowa, and the Hoover home base in North Canton, Ohio. Maytag CEO Ralph Hake has said the plants could be closed if cost savings are not found.
Fettig declined to discuss Maytag’s manufacturing plants but said Whirlpool could help reduce Maytag’s costs.
The proposal “could be an enormously positive deal for both parties, but particularly for Whirlpool,” said Laura Champine, an industry analyst with Morgan Keegan & Co. Joining with Maytag would allow Whirlpool to not only get better prices for raw materials but also to combine research and development resources, she said.
Investors seemed to agree. Maytag’s shares rose $2.03, or 13%, to $17.48. Whirlpool’s shares rose $3.32, about 5%, to $73.31.
Whirlpool’s offer would include an equal amount of cash and Whirlpool shares, Fettig said, and Whirlpool would assume $969 million of debt.
The Federal Trade Commission declined to comment on whether Whirlpool has filed for approval of the deal. The commission or the U.S. Department of Justice examines any proposed merger valued at $50 million or more.
