Mergers, Acquisitions and Takeovers Case Study

WHIRLPOOL – MAYTAG MERGER

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Abstract:
Whirlpool is the market leader in the US home appliance industry and holds the second position in the global market. The company was successful in retaining its volume sales growth, but failed to do so in the case of profitability. Pressurised by the slow growth of the maturing US market and competition from other appliance makers, Whirlpool expanded globally in search of growth. The company, however, did not succeed in strengthening its margins. Thus, it refocused on the US market and pursued acquisition growth strategy. The company acquired Maytag, the third largest home appliance maker in the US, paying a huge premium. The case deals with Maytag's acquisition by Whirlpool. It provides brief background notes about the two companies and the deal. Moreover, the case depicts the strengths and weaknesses of Whirlpool and the opportunities and threats prevailing in the home appliance market. The case also carries a detailed discussion on the expected synergies and challenges, emerging out of the acquisition. The case can be used for discussing issues related to growth through acquisition. Students can discuss the expected synergies and probable challenges that will follow Maytag's acquisition. Another learning objective is the 'Growth Trap'. A company desiring to grow, extends its product lines, adds new features or new products in the existing product segments and even acquires companies. This creates confusion in its consumers' mind space and undermines organisational focus. The company ultimately loses its competitive advantage and instead of registering higher revenues, suffers from declining profits. The case can also help students to learn about the 'Growth Trap' with reference to Maytag. Finally, it offers scope to discuss whether it is a wise decision to pay such a huge premium for a financially ailing company like Maytag.

Pedagogical Objectives:

Keywords : Growth through acquisition, Merger synergies, Growth trap, Maturing US home appliance industry, Commercial appliances, Product positioning, Branding, Competition from full-line manufacturers, Competitive advantage, Operational effectiveness

Contents : 
The Battle Comes To An End
Whirlpool: Pre-Merger Challenges
The Merger Synergies And Challenges
Maytag Consolidated Statements Of Operations
Whirlpool – A Brief Profile
Maytag – A Brief Profile