BENTON HARBOR — After a month-long, one-sided bidding war, negotiators from America’s largest appliance company appear to have won over a longtime rival. On Aug. 12, the board of directors at Newton, Iowa-based Maytag Corp. reversed its trend of standing nonplussed in the face of escalating buyout bids from competitor Whirlpool. The board determined Whirlpool’s $21-per-share offer to be a “Superior Company Proposal,” legally releasing the company from the obligation to see through a pending $14-per-share takeover bid from Ripplewood Holdings, a division of New York private equity firm Triton Acquisition Holding Co.
In light of that determination, the board also announced the postponement of an Aug. 18 shareholders’ meeting, at which the group planned to recommend approval of the lower Ripplewood offer. The meeting will now be held Aug. 30, allowing Maytag time to file with the Securities Exchange Commission a new proxy letter, advising shareholders of both the date change and the decision of the board to encourage the approval of the Whirlpool offer, which amounts to approximately $2.7 billion, including cash, stock and assumption of Maytag debt.
“We welcome the determination by the Maytag board of directors that ours is a superior proposal and look forward to the signing of a definitive agreement with Maytag,” said Whirlpool Chairman, President and CEO Jeff M. Fettig. He also said that Whirlpool had extended the expiration date of its offer to allow Maytag time to dispense with the Triton deal. As part of its buyout bid, Whirlpool agreed to pay Triton $40 million for intervening in its pending purchase transaction. The Business Journal was unable to contact Ripplewood CEO Timothy C. Collins for comment.
Assuming that Maytag shareholders approve the $21-per-share buyout offer at the Aug. 30 meeting, the acquisition will face scrutiny from federal regulators. The No. 1 appliance company in the country taking over No. 3 Maytag does pose a potential anti-competition concern. The combination of the two companies would result in a firm that makes more than 50 percent of the appliances sold in the country. However, as Fettig points out, that includes all of the appliances that Whirlpool manufactures for Sears Roebuck Co. under the Kenmore brand. Since Whirlpool simply holds a manufacturing contract and doesn’t actually control the marketing of these appliances, they should not be counted into the portion of the market the combined Whirlpool/Maytag company would control.
Just to be safe, Whirlpool has already provided to Maytag (and to the SEC) letters from its 20 largest customers, either voicing their approval for the deal or not voicing disapproval (some companies’ bylaws don’t permit them to make such endorsements). None of those 20 firms expressed a negative opinion of the deal. Fettig has stated repeatedly that he expects no problems passing the Federal Trade Commission’s examination.
Should the deal go through, Whirlpool will add to its stable of brands such names as Maytag, Jenn-Air, Amana and Hoover.
Whirlpool has remained silent about how it would reorganize Maytag after the takeover. It has suggested streamlining the company’s efficiency and reducing redundancy between the two companies’ production and supply chains.
