ATLANTA: Whirlpool Corporation is buying out rival appliance maker Maytag Corporation in a $1.7 billion cash and stock deal. Once completed, the unified entity will be the world’s largest appliance maker.
Maytag was under an earlier buyout agreement with equity firm Ripplewood Holdings and it paid $40 million as break-up fee to end the $1.1 billion deal. Whirlpool has reimbursed this amount to Maytag, the companies announced in a statement.
Maytag’s share has been priced at $21and the deal also involves Whirlpool assuming $977 million of the former’s debt. The acquisition is subject to shareholders’ and the regulator’s approval and could close in early 2006. There could be intense antitrust scrutiny as Benton Harbour, Michigan-based Whirlpool is the No 1 in its domain and Maytag the third largest.
The ailing Maytag has been on the block for months and Ripplewood had offered $14 a share. Whirlpool had made an initial offer of $17 per share and raised the price three times. Apart from the two, Chinese appliance maker Haier too had eyed Maytag, but withdrew subsequently.
Based on 2004 results, the deal will create a powerhouse with sales of $17.9 billion. Whirlpool, known for its brands like KitchenAir, Roper and Inglis has an estimated 35 per cent domestic market share while Maytag with its Hoover vacuums and Jenn-Air and Amana appliances holds about 15 per cent. The acquisition will see Whirlpool ahead of Sweden’s Electrolux as the No 1 in the world.
Whirlpool’s chief executive officer Jeff Fettig was confident that the Whirlpool-Maytag combination will secure regulatory approval. He said the the unified company will create substantial benefits for consumers, trade customers and shareholders.