Maytag Corp. directors, after waiting in vain for a rival suitor to raise its bid, agreed yesterday to sell the company to longtime appliance-industry rival Whirlpool Corp. for $1.7 billion.
The proposed acquisition is far from a sure thing, however. Because a Whirlpool/Maytag combination will hold a nearly 50 percent share in certain segments of the household-appliance marketplace, the acquisition is expected to face tough, protracted scrutiny from federal antitrust regulators.
Yesterday's accord ends a lengthy bidding process that began in May, when an investor group led by the New York buyout firm of Ripplewood Holdings offered to buy financially struggling Maytag for $14 a share, or $1.12 billion. Under that plan, Maytag was granted 30 days to seek a higher offer.
Maytag's efforts to find another buyer went nowhere, however, until Whirlpool entered the bidding at the 11th hour, offering $17, then $18 and finally $21 a share this month.
Even after Whirlpool entered the bidding, Maytag's directors had been recommending that stockholders approve the Ripplewood offer at an upcoming vote. But the board changed its recommendation this month after Whirlpool raised its bid to $21 a share.
Once Maytag declared Whirlpool's bid superior, Ripplewood had five working days to raise its bid. When that period expired Sunday night, with no response from the New York buyout group, Maytag agreed to a definitive pact with Whirlpool yesterday.
Maytag shareholders must still vote on the agreement, which calls for them to receive $21 in cash and Whirlpool stock for each share they own.
Maytag, despite having one of America's best-known brand names, has been losing market share and generating disappointing financial results for some time. The Newton, Iowa, company is considered too small to compete with larger rivals, and its reliance on high-cost U.S. manufacturing facilities has hampered its ability to compete with increasingly aggressive low-cost Asian producers in the North American market.
Observers think Whirlpool will be able to wring hundreds of millions of dollars in annual savings from its Maytag purchase, through efficiencies of scale and other factors.
The combination "will enable us to achieve significant efficiencies and better asset utilization," said Whirlpool Chairman and Chief Executive Officer Jeff Fettig.
