July 17, 2005
Whirlpool sets $1.3 bln bid for Maytag
By Karen Jacobs
ATLANTA (Reuters) - U.S. appliance maker Whirlpool Corp.
on Sunday proposed to buy smaller rival Maytag Corp. for more
than $1.3 billion, topping an existing buyout offer for the
maker of Hoover vacuums and possibly sparking a bidding war.
The Whirlpool offer of $17 a share beats a $14 a share bid
by an investor group led by New York private equity firm
Ripplewood Holdings. The offer represents a 10 percent premium
over Maytag's closing stock price of $15.45 on Friday.
The offer could ignite a bidding war, as a group including
Chinese appliance maker Haier has expressed interest in buying
Maytag for $16 a share but has not made a formal bid. Haier's
partners -- U.S. investment firms Bain Capital Partners and
Blackstone Capital -- were not available for comment.
The combination of Whirlpool and Maytag would marry
Whirlpool's Roper and KitchenAid appliance brands with Maytag's
Hoover, Jenn-Air, Amana and Jade brands.
Whirlpool, which also reaffirmed its 2005 earnings
forecast, valued its offer at $2.3 billion, including the
assumption of $969 million debt. The company has scheduled a
conference call to discuss the bid at 11:00 a.m. EDT (1500 GMT)
on Monday, July 18.
The Whirlpool offer values Maytag at almost 35 times
expected 2005 earnings of 49 cents a share. That's almost three
times Whirlpool's forward PE of 12.
Representatives of Ripplewood were not immediately
available to comment, and calls to Maytag were not immediately
Maytag has set an Aug. 19 shareholder vote in Newton, Iowa,
to vote on the Ripplewood deal. Ripplewood's investment
vehicle, Triton Acquisition Holding, made its offer in May.
In a letter to Maytag appended to its news release,
Whirlpool said it would pay at least 50 percent in cash and the
balance in shares. Whirlpool Chief Executive Jeff Fettig said
in a statement that Maytag fits its "strategy and capabilities,
will create strong value for our shareholders and provide
direct benefits to consumers and trade customers."
Whirlpool, based in Benton Harbor, Michigan, said it still
expects to deliver full-year 2005 earnings in the range of
$5.90 to $6.10 a share, compared with a consensus estimate by
Reuters Estimates of $5.89 a share.
Maytag has seen its profitability decline in recent years
amid a slump at its Hoover unit, higher raw materials prices
and increased competition from Asian rivals with lower costs.
This year, Maytag hit a low when retailer Best Buy stopped
selling its washers and refrigerators. Home Depot, which
accounted for 10 percent of Maytag's sales last year,
introduced LG Electronics appliances, increasing the
competition Maytag faces on that sales floor.
Maytag shareholders have criticized the Triton bid as too
low, and Maytag said in a recent federal filing that it faced
stockholder lawsuits over the deal's value.
Whirlpool's letter to Maytag said that it was ready to
"immediately review the due diligence information" that Maytag
has provided to Ripplewood and is currently providing the Haier
group, which includes Bain Capital and Blackstone Capital.
Whirlpool's letter to Maytag said the companies can achieve
"substantial efficiencies" to drive cost savings, use of assets
In recent weeks, Triton put pressure on Maytag to speed up
discussions with the Haier group. Triton has said the delayed
process could result in it walking away from its deal and
claiming a $40 million breakup fee. Maytag expects to finish
due diligence with Haier on July 22, it said in a recent SEC
The pact with Maytag contains a clause giving Ripplewood a
"last look" at a rival offer, allowing it to match the offer it
Whirlpool's stock started the year at $71, slid to around
$61 by mid-May, and then hit a high of $74.03 on June 21.
Maytag traded in the $9 range shortly before the Ripplewood
(Additional reporting by Michael Flaherty in New York)