DES MOINES, Iowa (AP) _ Maytag Corp. has signed a formal agreement to be acquired by its larger appliance making rival Whirlpool Corp. for more than $1.7 billion in cash and stock, the company said Monday.
Under terms of the deal, Maytag will be acquired for $21 a share. Whirlpool is also assuming $977 million of Maytag debt.
Jeff Fettig, Whirlpool CEO, offered reassurances that the combination of Whirlpool, the nation's largest appliance manufacturer, and Maytag, the third largest, will gain approval of federal regulators.
Analysts have said the deal will take up to nine months to complete as regulators study antitrust implications.
Prior to signing the Whirlpool agreement, Maytag terminated its earlier deal to be acquired for $1.13 billion, or $14 a share, by a New York-based investment group led by Ripplewood Holdings. Maytag paid the $40 million termination fee, and is being reimbursed by Whirlpool.
Maytag canceled the Sept. 9 special shareholder's meeting, which had been established to hold a vote on the Ripplewood deal.
Maytag shares fell 5 cents to $18.66 in afternoon trading Monday on the New York Stock Exchange, while Whirlpool shares fell 79 cents to $81.04.
Ripplewood decided against increasing its offer for Maytag, effectively bowing out of the bidding process.
``We have carefully considered all our options and concluded that it is not in the best interests of Ripplewood and our investor group to match Whirlpool's offer or submit a new bid for Maytag,'' said Timothy C. Collins, chief executive officer of Ripplewood, in a statement. ``We express our hope that Maytag, its shareholders, employees and the communities of which it is a part are well served by its agreement with Whirlpool and we wish them well.''
Maytag's board of directors reversed its support of the Ripplewood offer on Aug. 12 and said it planned to pursue the higher Whirlpool deal, concluding it was a superior offer and was likely to be approved by federal antitrust regulators.
Under the Whirlpool deal, Maytag shareholders will receive $10.50 in cash and a fraction of a Whirlpool share for each Maytag share. They will get 0.1144 of a share of Whirlpool stock if the average Whirlpool stock price is $91.79 or greater and 0.1398 if it is $75.10 or less; between the two prices, the exchange ratio will vary proportionately.
``After careful consideration in conjunction with our financial and legal advisors and an independent committee of Maytag's board consisting of all non-management directors, we reevaluated the transaction with Triton and concluded that the Whirlpool agreement is superior and is in the best interest of our shareholders,'' a statement by Howard Clark, Maytag's lead director said.
Fettig, the Whirlpool CEO, said the combination of Whirlpool and Maytag will create substantial benefits for consumers, trade customers and our shareholders.
``This transaction will enable us to achieve significant efficiencies and better asset utilization. It will also allow us to offer a wider range of products to a much broader consumer base,'' he said in a statement.