Regulator clears Whirlpool-Maytag deal

WASHINGTON - US antitrust regulators yesterday approved Whirlpool's planned US$1.7 billion ($2.84 billion) acquisition of smaller rival Maytag, a deal that will form the world's largest appliance maker.

After an investigation that lasted about six months, the US Justice Department said it would not oppose the deal, saying it "is not likely to reduce competition substantially".

Shares of both appliance makers shot up to new year highs on the news. Maytag surged 28 per cent, or US$4.73, to US$21.81, above Whirlpool's offer price of US$21 a share. Whirlpool shares rose US$6.38, or 7.1 per cent, to US$95.95, an all-time high.

Whirlpool has a distribution alliance with Fisher & Paykel Appliances outside the United States.

"It is likely that consumers will benefit from this transaction," Thomas Barnett, Justice's antitrust chief, said at a briefing.

Whirlpool, the No 1 US appliance maker, said it planned to complete its buyout of Maytag no later than April 3.

The combination will bring some of the best-known names in appliances under one umbrella, uniting Whirlpool's KitchenAid, Roper and Consul brands with Maytag's Hoover vacuums and Jenn-Air, Amana and Magic Chef products.

"With the Whirlpool and Maytag portfolio of brands, we will expand our consumer reach, which gives us opportunities to grow," Whirlpool chairman and chief executive Jeff Fettig said. Buyers would have "more choices than ever before, under brands that they trust".

Despite concern among some observers, including staff lawyers in the antitrust division, that the buyout would give the combined company a commanding share of the US market for washing machines and dryers, Barnett said further investigation led his division to conclude the deal would not be anti-competitive.

Critics, including two politicians from Maytag's home state of Iowa, had said the combination would give Whirlpool control of up to 70 per cent of the market for washing machines and dryers.

"That initial presumption is a rebuttable presumption, not a conclusion," Barnett said.

The Government said the largest appliance retailers, which include Sears Holdings, Lowe's, Home Depot and Best Buy, "have alternatives available to help them resist an attempt by the merged entity to raise prices".

Whirlpool also "substantiated large cost savings and other efficiencies that should benefit consumers," it said.

Analysts said the combination would end many struggles for the iconic Maytag, which has posted net losses for the past two years as it grappled with a slump at Hoover, loss of display space at Best Buy and competition from rivals such as South Korea's LG Electronics.

Maytag in February said it may sell North Canton, Ohio-based Hoover, which has been hurt by low-cost rivals and a lack of innovation.

"I think the Maytag brand will be back up on its feet in no time," said David MacGregor, an analyst with Longbow Research.

Laura Champine, a Morgan Keegan analyst, said the acquisition might open the door for Whirlpool's goods to be sold at retailer Home Depot, which now sold only Maytag, LG and General Electric appliances.

"Maytag is certainly more valuable to Whirlpool than it would be to any other company" because Whirlpool had scale and could use the added buying power to substantially lower costs, Champine said.

Fettig said there were a number of issues the companies were not yet able to discuss, including Maytag's proposed sale of Hoover or any possible plant closures.

"After we close, we will lay out a time frame when people should expect this information from us," Fettig said.

- REUTERS