By Adam Coleman and Agencies
WASHINGTON: After industry speculation the deal would be challenged, the US antitrust regulators have given the green light to Whirlpool Corp.’s proposed $1.79 billion takeover of Maytag Corp to form the world’s largest appliance maker, after concluding the merger would not be anti-competitive.
“The proposed transaction is not likely to reduce competition substantially,” the Justice Department said in a statement, further adding “large cost savings and other efficiencies that Whirlpool appears likely to achieve indicate that this transaction is not likely to harm consumer welfare.”
The acquisition was approved without any required divestitures and contrary to speculation Whirlpool will hold onto the entire brand portfolio. The merger will bring together some of the best-known names in appliances including Whirlpool’s KitchenAid, Roper and Consul brands with Maytag’s Hoover vacuums and Jenn-Air, Amana and Magic Chef.
“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, told Reuters in an interview.
During the investigation, Whirlpool, argued that growing foreign competition from makers such as China-based Haier Group, LG of South Korea and Sweden’s Electrolux AB would constrain its ability to unfairly raise its prices.
The Justice Department said in its statement that it was convinced the combined company can’t raise prices because of competition from General Electric Co. and Electrolux AB’s Frigidaire line. It also noted that foreign-made products sold by such companies as LG and Samsung Electronics have rapidly established themselves in recent years.
“LG, Samsung and other foreign manufacturers could increase their imports to the U.S. Existing U.S. manufacturers have excess capacity and could increase their production," the department said in its statement.
The merger should bring an end to the multitude of problems the iconic Maytag brand has faced, such as posting net losses for the past two years, as it struggled with a slump at Hoover and competition from rivals such as South Korea’s Samsung and LG Electronics.
Whirlpool offered to pay $US21 a share for Maytag, including the assumption of US$977 million of Maytag’s debt bringing the value of the entire deal to around US$2.7 billion.
In a fierce bidding war, Whirlpool outbid Ripplewood Holdings last year for Maytag and Haier withdrew its preliminary bid of $16 a share after Whirlpool bid $17.
Whirlpool then raised its offer three times to $21 a share before Maytag’s board agreed to the deal. Maytag Australia managing director, Paul McDonnell declined to comment on the implications for Maytag in the Australian market, but expected the merger will be completed in the next few days.