Haier America Trading has dropped its bid for Maytag in the wake of Whirlpool's surprise $1.33 billion offer to acquire the ailing appliance giant.
Whirlpool's unsolicited cash and stock proposal topped a $1.28 billion cash offer from the Chinese white- and brown-goods maker and its backers, Bain Capital Partners and Blackstone Management Associates. Whirlpool's proposal has also sparked speculation that Electrolux may now throw its hat in the ring.
The Haier group's withdrawal came days before it was expected to complete due diligence on Maytag, which received a letter from the suitors “stating that they have determined not to further pursue the transaction.”
Still on the table is Maytag's initial $1.13 billion all-cash acquisition agreement with an investment group led by Ripplewood Holdings, which is backed by Maytag's board. The consortium, 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.
Whirlpool's chairman, president and CEO Jeff Fettig noted that his company's proposal represents a 21 percent premium over the Ripplewood offer. “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.”
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 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 to submit a formal bid by Aug. 9.
Meanwhile, industry observers expect that Electrolux may now enter the fray, given its good strategic fit with Maytag and its sizable war chest. In a conference call, president/CEO Häns Straberg would neither confirm nor deny the Swedish manufacturer's intentions to counter Whirlpool's offer.
“I don't want to add to speculation,” he told analysts. “It's an ongoing process which we follow with great interest. The process is far from over.”
Commenting on a possible Whirlpool-Maytag merger, Straberg noted that “Retailers want to preserve choices.” He also cautioned that “Whoever buys Maytag will have a tough journey — there's a reason it's on sale.”
Dealers and analysts believe that, despite denials, Whirlpool's 11th-hour entry was a defensive maneuver designed to block Haier. With that deal off the table, it remains unclear whether Whirlpool would pursue a possible bidding war, although Fettig maintains that he's “serious about completing the transaction.”
The only thing that's certain, said Randy Johnson, majap merchandising VP for BrandsMart U.S.A., is that “We're a long way from being done with this.”