Whirlpool Corporation and Maytag Corporation signed a definitive merger agreement in which Whirlpool will acquire all outstanding shares of Maytag in a cash and stock merger valued at U.S. $21 per share. The aggregate transaction value, including assumption of approximately $977 million of debt, is approximately $2.7 billion.
Prior to signing the Whirlpool merger agreement, Maytag paid a $40 million termination fee to Triton Acquisition Holding and, thereafter, terminated the agreement with Triton. In accordance with Whirlpool's August 10, 2005, offer, as extended on August 12, 2005, Whirlpool has reimbursed the $40 million to Maytag. In addition, Maytag said that the special meeting of stockholders scheduled for Sept. 9, 2005, has been cancelled as a result of the termination of the Triton merger agreement.
Maytag shareholders will receive, for each share held, $10.50 in cash and between 0.1144 and 0.1398 of a share of Whirlpool stock. The amount of Whirlpool stock to be issued in exchange for each Maytag share will depend upon the volume-weighted average trading price of Whirlpool's stock during a 20 trading-day period ending shortly before the merger.
"The combination of Whirlpool and Maytag will create very substantial benefits for consumers, trade customers and our shareholders," said Jeff Fettig, Whirlpool chairman, president and CEO. "Overall, this transaction will translate into better products, quality and service, as well as efficiencies, which will enhance our ability to succeed in the increasingly competitive global home-appliance industry. We remain highly confident that we will receive regulatory clearance for this transaction in a timely manner."
Ralph Hake, Maytag chairman and CEO, said, "This combination brings together two leading organizations with strong traditions in quality and customer satisfaction. Together, Whirlpool and Maytag will bring substantial benefits to consumers around the world, as well as to shareholders and customers."
Whirlpool said it has sufficient resources to finance the acquisition and has received strong support from the banking sector. There have been no borrowings under this agreement. The acquisition and upcoming debt maturities of the combined company are expected to be financed through current bank agreements and with new committed bank facilities.
In addition to reimbursing the $40 million termination fee paid by Maytag to Triton, Whirlpool has agreed to pay up to $15 million to assist Maytag in retaining key employees. Whirlpool also has agreed to pay Maytag a "reverse break-up fee" of $120 million under certain circumstances in the unlikely event of failure to obtain regulatory clearance.
Maytag's shareholders are expected to vote on the transaction before the end of the year. Whirlpool expects the transaction to close as early as the first quarter of 2006, following approval from Maytag shareholders and regulatory clearance.
The Maytag Buyout Timeline So Far
May 19, 2005: Maytag Corporation, the Newton, Iowa, U.S.-based appliance maker, said it entered into a definitive agreement to be acquired by Triton Acquisition Holding in a deal valued at U.S. $14-per-share. Triton is an investor group of companies, led by Ripplewood. Triton's full roster includes: Ripplewood Holdings LLC, RHJ International, GS Capital Partners, and J. Rothschild Group of Companies.
June 20, 2005: Haier makes its bid. Maytag gets a preliminary buyout offer, valued at $16 per share, from Bain Capital Partners LLC, Blackstone Capital Partners IV L.P. and Haier America Trading, L.L.C.
June 27, 2005: Haier Group raises its bidding price for Maytag to U.S. $2.25 billion from the previous $1.28 billion, promising to take up a $975 million of Maytag debt.
June 30, 2005: Triton balks at increasing the value of its Maytag bid, informing Maytag that, by engaging in talks with Haier, it is giving Triton the right to terminate its merger offer. Maytag maintains that talks with other potential bidders are allowed under its agreement with the Ripplewood-led group.
July 18, 2005: Enter Whirlpool. Whirlpool Corporation joins the contest with a bid worth $17 per share. Whirlpool, based in Benton Harbor, Michigan, U.S. and one of the world's two largest appliance companies, says its bid represents a 21-percent premium over the price offered by Triton
July 20, 2005: Haier bows out, telling Maytag it will no longer pursue the transaction to acquire Maytag shares.
July 21, 2005: Maytag's board meets and finds it can't determine if the Whirlpool offer could really lead to a financially superior transaction.
July 25, 2005: Whirlpool Chairman, President and CEO Jeff M. Fettig chastises Maytag's board for not acting on the Whirlpool offer. "By delaying a prompt response and failing to recognize the clearly superior value of our July 17 proposal, the Maytag board of directors has jeopardized this important opportunity for consumers, trade customers, and shareholders of both Maytag and Whirlpool. To sweeten the deal, Whirlpool ups its offer to $18 per Maytag share, which Whirlpool says is a 29-percent premium to Maytag shareholders compared to the Triton offer.
August 8, 2005: Whirlpool makes a formal, binding offer, which raises the bid to $20 per Maytag share. Whirlpool says the total value of the offer represents a 43-percent premium over the price offered by Triton. The transaction is valued at $2.6 billion in cash and stock, based on assumed debt of $977 million. Whirlpool will pay Maytag's $40 million termination fee to Triton and commits to paying a "reverse break-up fee" of $120 million if the transaction does not close because regulatory approval is not obtained. In addition, Whirlpool will provide up to $15 million for the retention of Maytag employees.
August 10, 2005: Whirlpool revises its formal bid. The latest revised bidding offer increases the value to $21 per Maytag share.
August 12, 2005: Maytag's board of directors withdraws its recommendation of the pending merger deal with Triton Acquisition in light of the Whirlpool offer, which Maytag calls "superior." The Triton/Maytag agreement gives Triton five business days to respond with a better offer.
August 18, 2005: Maytag pushes back the date of its upcoming shareholders meeting from August 30 to Sept. 9, needing time to file and distribute proxy information.
August 22, 2005: Triton's five days are up. No revised Triton bid has been announced. Without one, Maytag can officially terminate its agreement with Triton and pursue the transaction with Whirlpool.
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