ATLANTA – Whirlpool Corp. (WHR) and Maytag Corp. (MYG) on Monday said they have signed a definitive agreement under which Maytag will be acquired by its larger rival for $1.7 billion in cash and stock, a deal that would create the world's largest appliance maker.
Maytag paid $40 million to terminate its previous buyout pact with private equity firm Ripplewood Holdings (search), and had been reimbursed for that charge by Whirlpool, the companies said in a statement.
The deal caps months of bidding for Maytag, a U.S. appliance icon that has been ailing because of high fixed costs and rising competition, that began in May with the Ripplewood offer of $14 a share, or $1.1 billion.
Whirlpool raised its offer for Maytag three times since initially bidding $1.3 billion, or $17 a share, in mid-July.
The acquisition would create an appliance powerhouse with well-known brands and sales of $17.9 billion, based on 2004 results. Maytag makes Hoover vacuums and Jenn-Air (search) and Amana appliances, while Whirlpool's brands include KitchenAid (search), Roper and Inglis.
Close antitrust scrutiny is expected. In the United States, Whirlpool, of Benton Harbor, Mich., is the No. 1 appliance company, while Newton, Iowa-based Maytag is the third biggest.
Whirlpool said it expects the acquisition to close as early as the first quarter of 2006, following Maytag shareholder approval and regulatory clearance.
"I think Whirlpool will clear the (Federal Trade Commission)," said Longbow Research analyst David MacGregor, but added that the companies might be required to shed some assets.
Maytag shares were down 4 cents to $18.67 in afternoon trading on the New York Stock Exchange, while Whirlpool was off $1, or 1.2 percent, to $80.83.
Maytag has risen about 61 percent since the Ripplewood bid was disclosed May 19 and is up 21 percent since Whirlpool's initial bid of $17 a share in mid-July.