On Wall Street, a deal is never done until the ink is dry and the check clears. For Maytag (NYSE:MYG), though, it's not just a question of when a deal will be done, but also who among its growing number of suitors will seal the deal.
First, privately held Ripplewood Holdings offered a $14-per-share deal to buy Maytag. Another bid followed, for $16 per share, from a group that included Bain Capital Partners, Blackstone Group, and China-based appliance maker Haier Group. Then on Sunday, Whirlpool (NYSE:WHR) jumped into the fray with a $17-per-share offer.
The bidding frenzy may be good for Maytag shareholders, but might it become an example of buyers overpaying? Now that Whirlpool has jumped into the fray, existing bidders may be tempted to increase their offers. In fact, Haier has already stated that it will announce this week whether it will compete with Whirlpool's bid. The situation may even encourage new suitors to chime in.
Maytag has been a laggard over the years, but that, strange as it seems, has become a big factor in its attractiveness. As Fool contributor David Meier pointed out in a recent piece, potential buyers see plenty of opportunities to make Maytag more efficient and profitable. Centralizing the purchasing process, which is important with recent commodity inflation, is considered an area ripe for improvement. There are also likely opportunities to shutter plants, eliminate redundancies, and combine certain research-and-development costs. It doesn't hurt, of course, that Maytag has a line of strong brands, including Amana, Jenn-Air, and Hoover, plus some big distribution agreements. Its partners include Motley Fool Inside Value recommendation Home Depot (NYSE:HD).
On the other hand, Motley Fool Stock Advisor pick Best Buy (NYSE:BBY) nixed its deal with Maytag earlier this year. And Whirlpool has to be wary of raising antitrust charges. The company, however, expressed confidence during its recent conference call that it would prevail over any such concerns. And the home appliance sector has seen plenty of competitive pressure, especially from overseas. For proof of how rough the sector can be, look no further than Maytag itself.
Wall Street appears to have confidence in the deal, given that Whirlpool's stock sits roughly 6% higher than it did at the closing bell on Friday. But keep in mind that Whirlpool's analysis on Maytag is based on external information sources. Maytag remains a troubled company, complete with rumors of bankruptcy early this year -- which makes this deal far from a no-brainer for Whirlpool.
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Fool contributor Tom Taulli does not own shares of any companies mentioned in this article.
