whirlpool makes unsolicited bid for maytag, creating 3-way race - new york times

Whirlpool Makes Unsolicited Bid for Maytag, Creating 3-Way Race
ByANDREW ROSS SORKIN and TIMOTHY L. O‘BRIEN
Published: July 18, 2005
TheWhirlpool Corporation made an unsolicited $1.36 billion bid forMaytag late yesterday, possibly igniting a three-way takeover battle for the company.
Whirlpool‘s offer comes two months after Maytag, the American appliance maker, agreed to be sold for $1.13 billion to Ripplewood Holdings, a private equity firm. That deal spurred Haier, a major Chinese conglomerate, to make a $1.28 billion bid for Maytag, hoping to trump Ripplewood‘s offer.
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Maytag Corporation, via Bloomberg News
The repairmen from Maytag‘s commercials, posing at a Calgary, Alberta, store. Maytag has agreed to be sold to Ripplewood Holdings.
With Whirlpool‘s entrance into the contest, a fierce bidding war for Maytag may now erupt. Maytag‘s suitors appear to believe they can turn around the company, which has struggled in recent years to compete against a growing number of aggressive, low-cost Asian rivals.
In a letter delivered to Maytag‘s board yesterday, Whirlpool‘s chairman and chief executive, Jeff M. Fettig, wrote: "Together we can achieve substantial efficiencies that will deliver cost savings, increased innovation and better asset utilization."
Whirlpool‘s bid of $17 a share for Maytag represents a 21 percent premium over Ripplewood‘s offer of $14 a share, but includes a mix of cash and stock. Haier‘s bid, backed by the Blackstone Group and Bain Capital, is for $16 a share in cash. Haier is expected to complete its review of Maytag‘s confidential records this week and then make a decision about whether to proceed with its bid. Whirlpool‘s bid is similarly contingent on it having the chance to review Maytag‘s confidential records.
Maytag‘s stock closed at $15.45 on Friday on the New York Stock Exchange, giving the company a market capitalization of about $1.23 billion.
Whirlpool‘s offer could force Ripplewood to drop its deal and try to force Maytag to pay it a $40 million termination fee. Last month, Ripplewood advised Maytag that continued negotiations with Haier might give it the right to terminate the deal because the talks were causing "disruption and uncertainty."
Whirlpool‘s bid for Maytag comes amid recent anxiety on Capitol Hill and in executive suites about the increasing willingness of Chinese companies to flex their financial muscles in trying to acquire American firms.
The China National Offshore Oil Corporation‘s $18.5 billion bid forUnocal last month, which came just two days after Haier‘s bid for Maytag, has drawn the most scrutiny. Last December,I.B.M. announced plans to sell its personal computing business toLenovo, China‘s biggest personal computer maker.
When Haier offered to buy Maytag on June 20, it said it would need several weeks to scour Maytag‘s books and operations before completing the deal. Just last week, Maytag said it planned to hold a shareholder vote on Haier‘s offer on Aug. 19. In public filings with the Securities and Exchange Commission on Friday, Maytag said it told Haier‘s financial advisers that it expected to complete its own due diligence on the offer by July 22. Maytag officials could not be reached for comment yesterday.
If there is any anxiety about Maytag falling into Chinese hands, it is almost certainly not because the company is a jewel in America‘s industrial crown. Analysts have considered Maytag, the country‘s third-largest home appliance manufacturer after Whirlpool andGeneral Electric, to be a prime takeover candidate for some time because of its heavy cost structure, lack of sales growth and sharply declining profitability. (The company posted a loss of about $9 million on sales of $4.7 billion last year.)
Before the recent flurry of takeover bids, a number of potential suitors apparently decided not to bid on the company after being offered the opportunity to examine it more closely. Maytag‘s public filings indicate that the company contacted 36 potential buyers between May 19 and June 17 to see if they were interested in bidding, according to Reuters.
Maytag‘s headquarters are in Newton, Iowa, the same town where F. L. Maytag founded the company in 1893 as a maker of farm tools. Maytag began making hand-cranked, wooden washing machines in 1907. In 1946, it started selling ranges and refrigerators, and later added dryers and dishwashers to its product line. It currently employs about 18,000 people.
Whirlpool, with profits of $406 million last year on revenue of $13.2 billion last year, and 68,000 employees, dwarfs Maytag. Founded in 1911, the company is based in Benton Harbor, Mich. Its primary product lines are laundry machines, dishwashers, refrigerators, air conditioners and small appliances. Like Maytag, however, Whirlpool‘s profitability has been erratic. It posted a loss of $394 million in 2002, before rebounding to post a $414 million profit the next year.
In trading Friday, Whirlpool‘s shares fell about 1.2 percent to close at $69.99 on the Big Board. The stock market currently values the entire company at about $4.7 billion.
Whirlpool is being advised in the takeover bid byGreenhill & Company, Weil Gotshal & Manges and the Boston Consulting Group.