Threat of Bidding War Over Maytag
MELISSA BLOCK, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
ROBERT SIEGEL, host:
And I'm Robert Siegel.
Suddenly Maytag is a hot property. The struggling appliance maker now has three bidders chasing after it and could become the target of a bidding war. The latest to enter the fray is Whirlpool, which yesterday announced it would pay $17 a share for Maytag. That adds up to $1.3 billion. Whirlpool's cash and stock offer trumps two outstanding bids, one of which Maytag's board has already recommended to shareholders. NPR's Jack Speer reports.
JACK SPEER reporting:
You might know Maytag from its appliances or from its commercials featuring the lonely Maytag repairman, but investors know Maytag as a company that's fallen on hard times. The company has seen its share of the appliance market steadily shrink over the last decade. Laura Champine is a home products analyst with Morgan Keegan.
Ms. LAURA CHAMPINE (Morgan Keegan): I think what's truly driving this deal is Maytag's stock had been trading at a 15-year low because steel prices were killing them. Hoover was falling apart as a direct result of competition from China and Wal-Mart making a big push in the space and that they'd also lost some share in major appliances.
SPEER: Maytag, one of the oldest names in the business, has slipped to around 15 percent of the US appliance market. Whirlpool is much stronger with a market share approximately twice the size of Maytag's. Combining the two might seem natural, but until recently no one in the industry thought that was possible. Again, analyst Laura Champine.
Ms. CHAMPINE: Most industry observers had assumed that a Whirlpool, Maytag combination would never make it past regulators given that together the company is roughly 50 percent of the US appliance market.
SPEER: In washers and dryers the combined market presence of the two companies would be even larger. But speaking with analysts during a conference call today, Whirlpool CEO Jeff Fettig downplayed that.
Mr. JEFF FETTIG (Whirlpool CEO): As we've evaluated this from an antitrust standpoint, we believe an acquisition of Maytag by Whirlpool will actually enhance this already very dynamic and competitive environment for all product categories in which both Whirlpool and Maytag compete.
SPEER: And, Fettig said, for stockholders and for consumers the deal also makes sense, representing a hefty premium over another offer for Maytag submitted by a New York-based investment group.
Mr. FETTIG: For Maytag shareholders our proposal is clearly superior. Not only will they receive a significant premium over the trading proposal, but they will also get an opportunity to share in the upside potential of the combined company through a continuing investment in Whirlpool.
SPEER: Whirlpool says it will pursue its bid for Maytag while checking out the company's financials. The tentative Whirlpool offer would also top an offer from an investment group that includes China's Haier Group and comes as Chinese companies have sought to acquire several US manufacturers. It's not clear whether the fact a Chinese firm has expressed an interest in Maytag means a proposed merger of the number one and number three US appliance makers would face any easier time with federal antitrust regulators. Jack Speer, NPR News, Washington.
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