ATLANTA – Maytag Corp. Friday said it was disappointed that two U.S. lawmakers in its home state of Iowa have asked the Justice Department to block its buyout by larger appliance rival Whirlpool Corp. (WHR).
Two Democrats, Iowa Sen. Tom Harkin and Rep. Leonard Boswell, sent a letter this week to Thomas Barnett, assistant attorney general for antitrust, saying the deal would impede competition by boosting Whirlpool's market share in certain product lines, particularly washers and dryers.
"In the laundry segment, a Whirlpool-Maytag company would control an excessively dominant 70 percent of the market," the letter said. "Clearly, a combined Whirlpool would be in a position to create real difficulties for competitors."
But Maytag, which has seen profits and market share plunge amid growing competition from foreign rivals such as South Korea's LG Electronics Inc. , said in a statement that the market shares mentioned in the letter are "significantly overstated."
Whirlpool offered $21 a share in cash and stock, or nearly $1.7 billion, to acquire Maytag in August, topping a bid of $14 a share from a private equity firm. Maytag shareholders approved the Whirlpool acquisition last month.
The deal must be cleared by the Justice Department, which requested additional information from the companies late last year. Regulatory authorities in Colombia and Germany have approved the buyout.
Maytag's statement said it is obvious the politicians are concerned about job losses in Iowa as a result of the combination, but added that their letter "ignores fundamental competitive realities" in appliances.
The company added that four large U.S. retailers control more than 65 percent of appliance sales and can pressure suppliers to offer competitive pricing. It noted that foreign companies like LG and China's Haier are gaining display space at these and other U.S. retailers.
"The transaction will result in significant efficiencies that will make the combined firm better able to compete with growing foreign competition, as well as with its traditional rivals," Maytag said.
Whirlpool, the No. 1 U.S. appliance maker, had no comment on the letter, a spokesman said.
The buyout would make Whirlpool the world's largest appliance maker, and unite Maytag's Hoover vacuums and Jenn-Air and Amana appliances with Whirlpool's KitchenAid and Roper brands.
The deal has also drawn concern from unions worried about the possible loss of Maytag jobs, particularly in Iowa. The buyout raises questions about what may happen to Maytag's headquarters in Newton, Iowa, because Whirlpool is based in Benton Harbor, Michigan.
Maytag, which is moving to close plants or reduce production to cut costs, said whether or not a transaction occurs, appliance competition "will continue to impact employment levels at facilities that are not cost competitive."
In their letter, the Iowa lawmakers said that if the deal is not blocked, the Justice Department should at least require Whirlpool to sell Maytag's washer and dryer operations to "a viable purchaser who will have the financial capability and desire to continue to operate that business."
Maytag's shares were up 2 cents to $17.70 on the New York Stock Exchange, while Whirlpool was off 90 cents, or 1.1 percent, to $80.98.