Key Proxy Firm Backs Whirlpool Bid for Maytag
ATLANTA – An influential proxy services firm has advised Maytag Corp.'s (MYG) shareholders to vote down a lower takeover offer from a private equity firm, raising hopes that Maytag could back a raised bid from rival Whirlpool Corp. (WHR), whose stock rose nearly 5 percent on Friday.
Institutional Shareholder Services (search) said Maytag investors should reject the bid of $14 a share, or $1.1 billion, from Ripplewood Holdings (search) after Whirlpool raised its offer for Maytag a third time this week, to $1.68 billion, or $21 a share.
Shares Maytag also jumped Friday as investors awaited Maytag's response to Whirlpool's latest offer.
"The market is certainly more confident in the Whirlpool bid," said Longbow Research analyst David MacGregor.
Sources close to the deal said Maytag's board was likely to formally back the offer from Whirlpool, which initially offered $17 a share in mid-July.
"As things currently stand, we think that the Whirlpool bid, adjusting for the antitrust risks, represents greater value than the Ripplewood transaction," said Muir Paterson, co-head of mergers and acquisition research at ISS.
Kevin O'Mara, a partner in the mergers and acquisitions department at New York law firm Cadwalader, Wickersham & Taft LLP, said Riplewood will have to raise its bid.
"If Ripplewood wants to stay in the bidding, they've got to get themselves much closer to the Whirlpool number."
Ripplewood's bid is currently scheduled to be put to a shareholder vote next Friday.
But if Ripplewood raises its bid, Whirlpool could also bid higher if it needs to, given the economies of scale it stands to gain by swallowing Maytag, added O'Mara.
A Maytag acquisition would help Jeff Fettig, who became Whirlpool's chairman and chief executive just over a year ago, create the world's largest appliance maker.
A combined Whirlpool-Maytag, analysts said, could negotiate better steel and parts prices from suppliers to compete against emerging global appliance giants such as Korea's LG Electronics (search) and Germany's Bosch (search), which are gaining U.S. retail space for their fancy, higher-end refrigerators and washers.
But before the merger is consummated, the deal is expected to draw close U.S. antitrust review. Maytag makes Hoover vacuums and Jenn-Air and Amana appliances, while Whirlpool's brands include KitchenAid, Roper and Inglis.
Recently, union officials worried about whether they will have jobs after a Maytag buyout have warmed up to Whirlpool takeover.
"We at Hoover are definitely pulling for Whirlpool," said Jim Repace, president of Local 1985 of the International Brotherhood of Electrical Workers, which represents 1,200 Maytag workers in North Canton, Ohio.
Repace said Whirlpool management seemed to be more in touch with workers than Maytag, which threatened to cut Hoover jobs and move work to lower-cost regions.
"We don't know if Whirlpool would remain in the floor-care business if it bought Maytag," Repace said. "But assuming they spin us off, we're still better off away from Maytag."
Maytag stock was up 27 cents to $19.06, while Whirlpool's stock rose $3.65, or 4.52 percent, to $84.35, both on the New York Stock Exchange.