Kudos to Maytag
The ultimate victor proved to be Whirlpool
I should also pause here to give kudos to one of my readers who wrote to me after my original column and said there was no way that the company would be sold for $14 a share. He was a bit off on the final price (he predicted $25 to $30), but he definitely had the right idea.
If the deal goes through without any significant asset sales, the combined companies will command close to half of the U.S. major appliance market -- leaving General Electric
Of course, that could prove to be a meaningful "if." The Federal Trade Commission is certainly going to take a look at this deal, and the fact that the combined company could control something like 70% of the laundry market is reason to pause. It would also seem that Whirlpool is expecting a lengthy process -- the purchase agreement doesn't expire until December of 2006.
While I'm skeptical of the need to better Ripplewood's offer by 50%, I suppose this could still be a reasonable deal for Whirlpool. The price paid is not ridiculous, and the combined company should be able to negotiate better terms with both suppliers and retailers like Motley Fool Stock Advisor pick Best Buy
Looking at Maytag's share price, the Street certainly has some concerns about the deal. After all, Maytag shares are trading for about $18.50, far from the $21 deal price. Arbitrage math can be a little quirky, but aggressive investors may be attracted to playing that spread if they think the market is overreacting to the anti-trust worries.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).