Newton, Iowa — Whirlpool has made an unsolicited $1.3 billion offer to acquire Maytag in a surprise move that could spark a bidding war for the ailing appliance giant.
The cash and stock proposal tops an initial $1.13 billion all-cash bid by an investor group led by Ripplewood Holdings, and a second $1.28 billion cash offer from a rival acquisition group that includes Chinese white- and brown-goods maker Haier America Trading.
Whirlpool’s chairman Jeff Fettig noted that his company’s proposal represents a 21 percent premium over the Ripplewood offer, which is backed by Maytag’s board. “Equally important,” he said, “the combination fits Whirlpool’s strategy and capabilities, will create strong value for our shareholders and provide direct benefits to consumers and trade customers.”
Retailers in particular would benefit from improved support and service, lower costs due to greater efficiencies, and a revitalized Maytag brand portfolio, Fettig said in a conference call. Based on initial feedback, dealers are “extremely pleased” with the prospect of a merger, he noted.
Maytag said its board would consider the Whirlpool proposal “in accordance with its duties,” but still supports the Ripplewood deal, which goes to a vote before shareholders on Aug. 19.
In a letter to Maytag’s chairman/CEO Ralph Hake, Fettig said that the impending shareholder vote, and an Aug. 9 cutoff for Maytag to terminate its merger agreement with Ripplewood, “compels both of us to work to achieve a definitive agreement” before Aug. 19. Fettig requested immediate access to Maytag’s confidential due diligence documents in order submit a formal bid by Aug. 9.
In the conference call, Fettig wouldn’t elaborate on what prompted the timing of Whirlpool’s 11th-hour entry, which comes months after Maytag had reportedly shopped itself around the industry. However, the prospect of Maytag’s venerated brands buoyed by Haier’s low-cost production may have certainly been a consideration. Haier is expected to decide whether to make a formal offer after it completes its review of Maytag’s records this Friday.
Meanwhile, the Ripplewood group, operating as Triton Aquistion Holding, is pressuring Maytag to press ahead with their merger by threatening to kill the deal and collect a $40 million termination fee, as permitted under the agreement. Triton also has a “last look” right to review and match a rival offer.
Maytag said in filings that an acquisition by Ripplewood would likely prompt lawsuits by shareholders who object to what they consider a low-ball offer.
While the Triton-Maytag transaction has been given the green light by the Federal Trade Commission, a merger between Whirlpool, the largest United States majap maker, and Maytag, the No. 3 white goods vendor, could clearly raise anti-trust concerns with the FTC, particularly in laundry, given their dominant market share.
Fettig addressed the issue during the conference call, arguing that a union would allow Maytag to better compete in a fiercely competitive global marketplace. He added that Whirlpool’s attorneys had analyzed the anti-trust implications over the past two months, but could find “no plausible concern that competition would decrease.”
Also unclear is how Whirlpool would manage a combined brand portfolio, given the marketplace overlap of the Whirlpool and Maytag, and KitchenAid and Jenn-Air nameplates.
Regardless, Fettig argued in his letter to Hake that “Together we can achieve substantial efficiencies that will deliver cost savings, increased innovation and better asset utilization. With these efficiencies, and Whirlpool’s track record of — and commitment to — investing in innovation, quality and customer service, our combined company will be well positioned to offer great value to consumers and to trade customers. And as part of Whirlpool, we can ensure that Maytag remains a trusted brand for years to come.”