Maytag opens books to suitor Whirlpool

Two rivals edge closer to $1.43 billion merger

July 28, 2005|By James P. Miller | James P. Miller,CHICAGO TRIBUNE

Maytag Corp. has agreed to open its books to suitor Whirlpool Corp., as the two appliance-industry rivals edged closer to a possible deal.

Whirlpool, of Benton Harbor, Mich., said yesterday that it entered into a confidentiality agreement with Maytag, under which Whirlpool can "immediately commence" the in-depth examination of a buyout target's nonpublic financial materials.

Whirlpool has said it is willing to pay $18 a share, or about $1.43 billion, to buy Maytag, assuming a review of Maytag's finances turns up no previously unknown problems. But until the confidentiality accord was announced yesterday, getting such a look has been a problem.

In May, Maytag agreed to be acquired for $14 a share by an investor group led by Ripplewood Holdings of New York. Later, a Chinese company, Haier Group, made a $16-a-share overture, and Whirlpool weighed in with a $17-a-share proposal.

After Haier dropped out of the bidding, Maytag still remained lukewarm toward Whirlpool's proposal. In part, it was concerned about showing its longtime arch rival proprietary Maytag pricing and market data - especially because there's a chance that federal antitrust regulators might balk at a Maytag-Whirlpool combination.

Under a worst-case scenario, Maytag could break a solid deal with Ripplewood, show secret in-house materials to a competitor, and end up with no deal because the government prevented the merger on the grounds that it would damage competition.

On Friday, Whirlpool raised its proposal to $18 a share. On Sunday evening, Maytag said it would consider showing its books to the unsolicited bidder, but it first needed "greater certainty" regarding a number of issues. Yesterday's disclosure suggests that Whirlpool has been able to allay Maytag's reservations.

Whirlpool has said its 70-person due diligence team will need about two weeks to complete its review.

The wild card in the situation remains Ripplewood, which remains the only company with a formal offer for the Newton, Iowa appliance maker on the table. Maytag shareholders are scheduled to vote Aug. 19 on whether to accept Ripplewood's all-cash, $14-a-share bid.

It's not certain that the shareholders will reject it, some observers suggest. The Ripplewood deal could close relatively quickly, but Maytag stockholders wouldn't get the $18 in stock and cash from Whirlpool until after the proposed combination undergoes what is likely to be a lengthy antitrust review - and only if it passes regulatory muster.

Under its agreement with Maytag, Ripplewood can collect a $40 million breakup fee if its deal doesn't go through. It earlier warned Maytag that opening the books to Whirlpool breaches the two companies' agreement, clearing the way for Ripplewood to walk away from the deal and collect the breakup fee.

A spokesman for Ripplewood declined comment on the buyout firm's intentions.

The Chicago Tribune is a Tribune Publishing newspaper.

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