New York — Whirlpool and Maytag today entered into a definitive agreement that has Whirlpool acquiring the latter company for $2.7 billion in cash, stock and assumed debt.
Whirlpool’s offer of $21 per share was twice that of Ripplewood Holdings, the other bidder, said Maytag CEO and ChairmanRalph Hake, and his company is now preparing to obtain regulatory approval of the merger. If all goes according to plan, federal consent could be received and the deal finalized by the first quarter of 2006.
In an open letter to Maytag’s employees Hake addressed the issue of layoffs, which he said would likely take place, but he could not discuss numbers at this early juncture.
“Understandably, I realize that many of you want to know how a possible merger with Whirlpool may impact your job; however, it’s far too early to talk about how any given department or individual job may be affected. I do recognize that in any combination like this, where duplicate positions may exist, it is reasonable to expect that some jobs will be eliminated,” he said.
Hake said that during the integration process personnel from both companies will be looked at to fill open or overlapping positions.
Hake implored his employees to keep working hard and not allow the stresses of the acquisition to be a distraction.
“We need to continue to do our jobs — selling, distributing, manufacturing and developing our products. Each of us should continue to come to work every day with a strong commitment to do our jobs to the best of our abilities with pride in our accomplishments,” he said.
The merger’s announcement came on the same day that Ripplewood allowed its $1.12 billion offer for Maytag to expire, leaving Whirlpool as the lone bidder. As part of its agreement with Ripplewood, Maytag paid a $40 million termination fee to that firm and formally terminated that contract.
By allowing its agreement with Maytag to lapse, Ripplewood, which made the bid through its subsidiary Triton Holdings, essentially refused to top Whirlpool’s offer. For the deal between Whirlpool and Maytag to be finalized it still must pass muster with federal regulatory authorities, but if the two do join forces they will form the world’s largest major appliances firm.
The action on Aug. 22 caps a soap opera-like process that started in May when Ripplewood tendered its initial offer of $1.12 billion. Haier joined the fray in June upping the ante to $1.28 billion angering Ripplewood. (Please see Triton Pressures Maytag After Haier Offer.) In July Whirlpool came into the picture on July 18 throwing out an unsolicited $17 per share, or $1.3 billion bid, which helped usher Haier out of the bidding war two days later.
Maytag declined Whirlpool’s first offer (Maytag Rebuffs Whirlpool Offer) then a few days later the company decided to entertain the bid from its rival (Maytag Reconsiders Whirlpool’s Bid.) Whirlpool then began the due diligence process with Maytag by going over its books as a preliminary step toward making an official bid on the company. Whirlpool’s second bid was $18 per share and finally the company placed a $21 per share, or $1.7 billion, onto the table. Maytag set the stage for today’s action by backing the third offer on Aug. 18.