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China's Haier undecided on Maytag bid
(Agencies)
Updated: 2005-07-06 07:25
SHANGHAI - Haier Group, China's biggest home appliance maker, said Tuesday it
is still interested in making an offer for larger U.S. rival Maytag, but has not
yet decided on whether to make a formal bid.
"Haier Group is very interested in the matter of acquiring Maytag (Research),
but up until now has not made any decision regarding the matter of an
acquisition," Haier said in a statement sent to Reuters.
The statement was Haier's first since its group, which includes Blackstone
Capital and Bain Capital Partners, expressed interest last month in a potential
$1.28 billion bid for Maytag, maker of its own brand washers and Hoover vacuums.
The Haier group said it expected due diligence before any formal offer would
take six to eight weeks, which would take until early to the middle of August.
The group expressed its interest shortly before the expiration of a period
for rival offers to a $1.13 billion bid by private equity giant Ripplewood,
whose group includes Goldman Sachs (Research)' GS Capital Partners and J.
Rothschild Group.
The Haier group's entry into the picture prompted Ripplewood last week to
threaten to withdraw its offer to buy the struggling U.S. appliance maker, and
to push for a quick resolution of the matter.
However, Jack Huang, a mergers and acquisitions specialist at law firm Jones
Day, said Ripplewood's tactics were not unusual for a contested sale of a major
company like Maytag, and are probably designed to stop a bidding war.
"Ripplewood is trying to prevent (a bidding war) from happening by trying to
get a message to Maytag, saying, 'I gave you a bid that was pretty decent... so
I'm not going to go into this escalation game. You have to choose,"' said Huang,
who heads up Jones Day's Greater China practice.
A Haier purchase of Maytag would give the Chinese firm -- already a household
name in its home market -- instant brand recognition in overseas markets where
it has been trying to expand.
Such a move would parallel a similar spate of recent acquisitions by Chinese
firms, including computer maker Lenovo's purchase of IBM (Research)'s PC
business and TCL Multimedia's purchase of the TV making assets of France's
Thomson.
Haier, whose publicly traded units include Hong Kong-listed Haier Electronics
Group and China-listed Qingdao Haier Refrigerator Co., is one of only a few
Chinese companies to enjoy a limited degree of success outside its home market.
Even so, its inroads into markets like the United States have been confined
largely to mini-fridges and wine coolers, with bigger products like washing
machines and air conditioners enjoying less progress.
Maytag, meantime, is a former U.S. industry giant that has fallen on hard
times due to higher material costs and reliance on manufacturing in the U.S.
market where labor costs are high.
Maytag shares jumped after interest from the Haier group was first announced
and now trade near the $16 mark, or the level of the preliminary offer indicated
by the Haier group.
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