Filed by: Whirlpool Corporation
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Maytag Corporation
Commission File No: 1-655
MAYTAG/WHIRLPOOL
Q&A FOR S-4
FILING DETAILS
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Q. WHAT AND WHY HAVE YOU FILED? WHAT IS THIS DOCUMENT?
A. This document is called a "Form S-4/Registration Statement." It is filed
with the Securities and Exchange Commission (SEC). Once cleared by the
SEC, most of the document is sent to Maytag shareholders. The document
serves two purposes:
1) Maytag's board of directors will use this document to solicit
proxies from the holders of Maytag common stock for use at the
Maytag special meeting, where holders of Maytag common stock will be
asked, in part, to vote upon adoption of the merger agreement.
2) In addition, Whirlpool will send this document to Maytag
shareholders as a prospectus in connection with the issuance of
shares of Whirlpool common stock, in exchange for Maytag common
stock in the merger.
ACQUISITION PRICE
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Q. WHY DID WHIRLPOOL STRUCTURE THE DEAL 50% EQUITY AND 50% STOCK?
A. We believe the mix of stock and cash provides financial flexibility for
the combined company and allows existing Maytag shareholders the
opportunity to participate in the value-creating opportunities from the
combined company.
Q. WHAT WILL MAYTAG SHAREHOLDERS RECEIVE IN EXCHANGE FOR THEIR SHARES?
A. Under the terms of the merger agreement, each share of Maytag common stock
will be exchanged for (a) $10.50 in cash and (b) between 0.1144 and 0.1398
of a share of Whirlpool common stock. In the proxy statement /prospectus,
we refer to the fraction of a share of Whirlpool common stock to be issued
for each share of Maytag common stock as the "exchange ratio." The
exchange ratio will be determined by reference to the volume weighted
average sales price per share of Whirlpool common stock on the New York
Stock Exchange for the 20 consecutive full trading days ending on the
second trading day prior to the effective time of the merger, which we
refer to as the "reference price."
The exchange ratio will adjust to ensure that the fraction of a share of
Whirlpool common stock received will be equal to $10.50 divided by the
reference price, so long as the reference price is between $75.1039 and
$91.7937. If the reference price is less than $75.1039, the exchange ratio
will no longer adjust, and Maytag shareholders will receive 0.1398 of a
share of Whirlpool common stock. If the reference price is greater than
$91.7937, the exchange ratio will no longer adjust, and Maytag
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shareholders will receive 0.1144 of a share of Whirlpool common stock for
each share of Maytag common stock they own.
The number of shares of Whirlpool common stock Maytag shareholders will
receive in the merger will equal the number, rounded down to the nearest
whole number, determined by multiplying the exchange ratio by the number
of shares of Maytag common stock Maytag shareholders own.
Maytag shareholders will not receive any fractional shares of Whirlpool
common stock in the merger. Instead, they will be entitled to receive
cash, without interest, for any fractional share of Whirlpool common stock
they might otherwise have been entitled to receive, based on a portion of
the proceeds from the sale of all fractional shares in the market.
For more information on the exchange ratio, please see the proxy
statement/prospectus.
Q. HOW DID WHIRLPOOL ARRIVE AT THE $120M REVERSE BREAK-UP FEE?
A. Transactions of this nature are often structured with some type of reverse
breakup fee. In our case, we negotiated the terms in a manner that was
deemed mutually satisfactory with Maytag and Whirlpool. We also agreed to
provide up to $15 million to assist Maytag in retaining employees.
For more information on the background of the transaction, please see the
proxy statement/prospectus.
Q. WHY DOES WHIRLPOOL WANT TO BUY MAYTAG?
A. Whirlpool currently expects the merger with Maytag to generate
approximately $300 to $400 million of annual pre-tax savings by the third
year following completion of the merger. Efficiencies are expected to come
from all areas across the value chain, including product manufacturing and
marketing, global procurement, logistics, infrastructure and support
areas, product research and development, and asset utilization. Achieving
these efficiencies will require one-time costs and capital investments
currently estimated to be in the range of $350 million to $500 million, a
majority of which currently are anticipated to be capitalized through
purchase accounting. Whirlpool currently anticipates incurring these costs
during the first two years following completion of the merger.
Whirlpool believes that the transaction presents Whirlpool with the
opportunity to:
o Through the achievement of these cost savings, compete more
effectively against domestic and foreign competitors in North
America and elsewhere in the world;
o Offer a wider range of high quality products to a significantly
larger consumer base; and
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o More fully deploy Whirlpool's innovation capability across a wider
range of products.
FINANCING
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Q. WHAT IS THE EXPECTED IMPACT ON WHIRLPOOL'S DEBT RATING ONCE IT ACQUIRES
MAYTAG?
A: We expect that the acquisition will generate significant efficiencies that
are expected to be realized in the near term. We expect to retain an
investment grade credit rating.
ANTICIPATED SAVINGS/BENEFITS OF MERGER
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Q. WHAT ARE WHIRLPOOL'S EXPECTED FINANCIAL BENEFITS FROM THE ACQUISITION?
A: Whirlpool currently expects the merger with Maytag to generate
approximately $300 to $400 million of annual pre-tax savings by the third
year following completion of the merger. Efficiencies are expected to come
from all areas across the value chain, including product manufacturing and
marketing, global procurement, logistics, infrastructure and support
areas, product research and development, and asset utilization. Achieving
these efficiencies will require one-time costs and capital investments
currently estimated to be in the range of $350 million to $500 million, a
majority of which currently are anticipated to be capitalized through
purchase accounting. Whirlpool currently anticipates incurring these costs
during the first two years following completion of the merger.
Whirlpool believes that the transaction presents Whirlpool with the
opportunity to:
o Through the achievement of these cost savings, compete more
effectively against domestic and foreign competitors in North
America and elsewhere in the world;
o Offer a wider range of high quality products to a significantly
larger consumer base; and
o More fully deploy Whirlpool's innovation capability across a wider
range of products.
Q. GIVEN THE SIGNIFICANT SYNERGIES WHIRLPOOL IS EXPECTING, SHOULD LAYOFFS BE
ANTICIPATED? WHERE ELSE WOULD THE SYNERGIES COME FROM?
A: Synergies will come from all areas across the value chain, including
procurement, distribution, and research and development. Until the merger
is completed, Maytag will continue to operate its businesses
independently, and we are not currently in a position to discuss the
specifics of how these efficiencies will be derived.
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Q. WHAT ARE THE PRIMARY OBSTACLES THAT MIGHT PREVENT A TIMELY INTEGRATION OF
MAYTAG'S AND WHIRLPOOL'S OPERATIONS?
A. Multiple risks associated with the transaction are discussed in detail in
the proxy statement/prospectus.
Q. MAYTAG'S CURRENT MANAGEMENT, AS DISCLOSED IN THE PROXY
STATEMENT/PROSPECTUS, ISSUED FIVE-YEAR, LOW-CASE, BASE-CASE AND HIGH-CASE
FORECASTS IN WHICH IT ASSUMED THE SHUTDOWN OF ITS NEWTON, NORTH CANTON AND
FLORENCE FACILITIES. DOES WHIRLPOOL AGREE WITH THIS STRATEGY? DOES THE
MERGED COMPANY INTEND TO FOLLOW THROUGH WITH THE SHUTDOWNS?
A. Whirlpool and Maytag are independent companies. Maytag will continue to
operate as a separate company and we cannot speak for them. It is too soon
to discuss what may or may not happen if the merger is completed.
REGULATORY CLEARANCE/ANTI-TRUST
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Q. WHAT IS THE TIMETABLE FOR THE ANTITRUST PROCESS?
A: Both parties filed notification and report forms, as part of the
Hart-Scott-Rodino antitrust law requiring notification to the federal
government of certain transactions, on Sept. 6, 2005. Under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and
related rules, referred to as the HSR Act, the merger cannot be completed
until the expiration of a waiting period that follows the filing of
notification forms by both parties to the transaction with the Federal
Trade Commission and Antitrust Division of the Department of Justice. We
expect that the requirements of the HSR Act may be satisfied so that the
merger can be completed as early as the first quarter of 2006.
In addition, Whirlpool and Maytag have submitted or will submit merger
notification filings to foreign regulatory authorities in Canada, Mexico,
Colombia, Brazil, Germany and any other jurisdiction where the parties
determine that such filings are required.
Q. WHEN DO YOU EXPECT THE DEAL TO CLOSE?
A. We are working to complete the merger as promptly as practicable. We
expect the merger to be completed as early as the first quarter of 2006,
following approval from Maytag stockholders at the special meeting and
receipt of required regulatory approvals. For further information
regarding regulatory approvals necessary for completion of the merger,
please see the section entitled "The Merger - Regulatory Matters Relating
to the Merger" in the proxy statement/prospectus.
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CURRENT BUSINESS
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Q. WHAT IS THE SUPPLIER-RELATED AND POTENTIAL PRODUCT SAFETY PROBLEM THAT
WHIRLPOOL IS INVESTIGATING THAT MAY AFFECT UP TO 3.5 MILLION APPLIANCES
AND MAY COST UP TO $235 MILLION?
A. Whirlpool is currently investigating a supplier-related quality and
potential product safety problem that may affect up to 3.5 million
appliances manufactured between 2000 and 2002. Whirlpool currently
estimates that its potential cost from this matter ranges from $0 to $235
million, depending upon whether it is determined that some or all of the
appliances must be repaired or replaced, whether the cost of any such
corrective action is borne initially by Whirlpool or the supplier, and, if
initially borne by Whirlpool, whether Whirlpool will be successful in
recovering its costs from the supplier. In addition, Whirlpool could incur
other costs arising out of this matter, which cannot currently be
estimated but could be material. The company is not in a position to
provide additional information at this time.
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