Maytag said on Monday it would “consider” an unsolicited approach from Whirlpool worth about $1.4bn, as shares in the US appliance maker now at the centre of a three-way takeover battle soared more than 11 per cent.
For now, Maytag said it would continue to stick with a deal agreed in May to be bought by Ripplewood Holdings, the US private equity group, for $1.13bn in cash.
But the company added that, “in accordance with its duties”, Maytag’s board would need to study the initial proposal from Whirlpool – the largest player in the US white goods market.
At $17 per share, Whirlpool’s offer would be higher than either Ripplewood’s, worth $14 per share, or an indicative offer worth $16 per share placed last month by China’s Haier and buy-out groups Bain Capital and Blackstone. Wall Street investors were on Monday betting that Whirlpool’s move would spark a bidding war. By noon in New York, Maytag shares were trading up 11.5 per cent at $17.23, or above the level of all three potential transactions.
Meanwhile, Whirlpool was laying out its case for a takeover of Maytag on a conference call. Jeff Fettig, Whirlpool chairman and chief executive, said the emergence of more appliance companies in the region required “Whirlpool and other companies to compete vigorously”.
“The prospect of a revitalised Maytag brand enhances competition,” he said. “We think it’s a great strategic fit, we believe its pro-competitive and it’s the best solution to address Maytag’s business challenges.”
Laura Champine, analyst at Morgan Keegan, said the combination could raise antitrust concerns in the US, with the combined group taking a market share of 65 per cent share in laundry appliances, and an almost 50 per cent share in appliances overall.
However Whirlpool said it there was “no plausible concern that competition would be reduced”.
Mr Fettig said this was because the number of retailers stocking appliances had grown rapidly in recent years.
“There are five manufacturers supplying [US retailer] Sears. There are a large number of competitors that can compete at any time for that part of the business,” he said.
Asian appliance makers such as Haier and South Korea’s LG Group, have increased their market share in the US appliance market recently.
Whirlpool’s global presence would allow it rapidly to integrate Maytag into its manufacturing network, while Maytag’s brands – including the Hoover vacuum cleaner and Jenn-Air kitchen appliances – would complement those of Whirlpool, Mr Fettig said.
It was unclear whether Whirlpool would be granted immediate access to Maytag’s confidental financial information. The Haier group’s hopes of being able to perform “due diligence” on Maytag until mid-August were dashed after objections from Ripplewood forced Maytag to insist the discussions be completed by the end of this week.
From MSN Money