China’s largest appliance maker, Haier, is likely to decide this week whether to top Whirlpool Corp’s $1.3 billion bid for Maytag, but industry experts question whether it can bankroll such a bid.
A consortium that includes the Chinese state giant, which domestic media say takes in more than twice Maytag Corp’s annual sales, may sharply boost its $16 per share bid to grab the iconic maker of Hoover Vacuum Cleaners, some analysts say.
But others added, they could not figure where the extra money would come from, given Haier’s consistently sliding margins amid a protracted industry price war and soaring steel prices, coupled with years of heavy spending on foreign expansion. Maytag shares closed at $17.48 in US trade on Monday, above Whirlpool’s $17 per share bid, suggesting investors expected a higher bid to emerge.
“Haier is likely to offer a higher price than Whirlpool. They are that determined to go abroad,” an analyst with the securities arm of a big Chinese bank said, requesting anonymity. “But their cash flow is poor and their margins already thin. Even domestic banks would be cautious in lending to them right now.”
Haier has shown surprising savvy in the bid process so far, signalling the coming-of-age of Chinese companies as they seek overseas assets.
From The Financial Express
