U.S. appliance maker Maytag Corporation announced that its board of directors has withdrawn its recommendation of the pending U.S. $14-per-share merger deal with Triton Acquisition Holding, the acquisition vehicle formed by the Ripplewood Holdings led investor group.
Maytag said that its board has determined that in light of the $21 Whirlpool Corporation binding, irrevocable proposal, which was announced on August 10, "it would be inconsistent with the Maytag board's exercise of its fiduciary duty for the board to fail to withdraw its recommendation of the Triton $14 deal." The Maytag Board now recommends a vote against the Triton deal.
Maytag also stated that its board has made the determinations required under the Triton merger agreement to constitute the Whirlpool $21 proposal a "superior company proposal" and that it is more favorable from a financial point of view to Maytag shareholders and is reasonably capable of being completed.
Maytag said that as of August 12, it is giving notice to Triton of the Maytag board's determinations. As a result, Maytag will be entitled to terminate the existing Triton merger agreement if its board makes similar determinations (taking into account any revised proposal Triton may make) at least 5 business days following Triton's receipt of such notice.
In addition to Maytag's termination right, as a result of the change in recommendation by the Maytag board, the appliance maker said Triton has the right to terminate the Triton merger agreement immediately. In the event of such a termination by Maytag or by Triton, Triton will be entitled to a $40-million fee from Maytag, which Whirlpool has agreed to pay.
The Whirlpool proposal calls for each Maytag share to be converted in a taxable transaction into $21 of total consideration. One half of the per share consideration would be paid in cash and the balance in shares of Whirlpool common stock. The number of shares of Whirlpool common stock to be paid per Maytag share will be based on a floating exchange ratio. The floating exchange ratio will be subject to a collar equal to +/- 10% of the volume weighted average price of Whirlpool common stock on the New York Stock Exchange as of August 12.
As previously reported, in addition to its agreement to pay the $40 million break-up fee payable to Triton, Whirlpool has also agreed to provide Maytag with up to $15 million for retention of Maytag employees and has agreed to pay a "reverse break-up fee" of $120 million if the transaction cannot be closed due to an inability to obtain regulatory approval.
Maytag also announced that it is postponing the special meeting of stockholders scheduled for August 19 to August 30 in order to permit Maytag to file and distribute updated proxy materials and to allow time for adequate dissemination and absorption of information concerning these important developments. If the merger agreement between Maytag and Triton is terminated, the postponed special meeting will be cancelled.
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