The board of the Maytag Corp announced on Friday that it would back a US$1.68 billion takeover offer from the Whirlpool Corp, withdrawing its earlier recommendation of a bid from a group led by the private equity firm Ripplewood Holdings.
Maytag's announcement said the deal was "reasonably capable of being completed," an acknowledgment of the antitrust concerns that face the potential combination. Whirlpool has offered US$21 a share in cash and stock, compared with Ripplewood's all-cash offer of US$14 a share, or US$1.13 billion.
"We welcome the determination by the Maytag board of directors that ours is a superior proposal and look forward to the signing of a definitive agreement with Maytag," Jeff Fettig, Whirlpool's chief executive, said in a statement.
Whirlpool said it would amend its offer to remain open until noon on Aug. 23, allowing Maytag the opportunity to formally terminate its agreement with Ripplewood.
A spokesman for Ripplewood, which Maytag has now given five days to make another offer, declined comment.
The deal would create a dominant portfolio of appliance brands that includes Amana, KitchenAid, Magic Chef, Hoover and Jenn-Air, consolidating nearly half the domestic market for refrigerators, washers, dryers and ovens. In anticipation of the announcement, Whirlpool shares surged 4.6 percent on Friday, to US$84.40, up US$3.70, while Maytag added US$0.22 to US$19.01.
Whirlpool, which is based in Benton Harbor, Michigan, originally offered US$17 a share for Maytag, which is based in Newton, Iowa.
Maytag's announcement on Friday cited details that Whirlpool put forth in its recently sweetened bid: the payment of a US$40 million breakup fee to Ripplewood, US$15 million to Maytag for employee retention and US$120 million to Maytag if regulators reject the deal. Whirlpool will also assume US$977 million in debt.
"At this point, I think it's likely that Ripplewood will just collect its fee," said Laura Champine, an analyst with Morgan Keegan. She predicted that Maytag and Whirlpool would quickly draft a merger agreement of their own and that the deal would most likely clear antitrust muster as regulators consider the increasingly global market for appliances.
Whirlpool has tried to tamp down fears that an alliance with Maytag would strike antitrust regulators as anticompetitive. Some antitrust experts have suggested that the deal may be blocked by the government. But in a quarterly analyst conference call in July, Fettig noted that the combined company's share of eight core product categories would still be below 30 percent.
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