M&A

China’s Latest Export: Hostile Takeovers

The largest appliance maker in China is part of a group bidding for Maytag, but another widely reported deal would be the biggest abroad by a Chine...
Stephen TaubJune 22, 2005

U.S. companies worried about the surge of exports from China have something new to be concerned about.

Maytag Corp. announced in a press release that it had received a proposal from a group including China-based Haier America Trading LLC and U.S.-based private-equity firms Bain Capital Partners LLC and Blackstone Capital Partners IV L.P. to acquire the appliance maker for $16 per share in an all-cash deal. This tops the $14 per share, in cash, offered by an investor group led by Ripplewood Holdings LLC and agreed to by Maytag on May 19.

Maytag stated that it intends to proceed with further due diligence with Bain, Blackstone, and Haier America. “We continue to support the Ripplewood transaction,” said Howard Clark, Maytag’s lead director, in a statement. “However, we also believe that it is incumbent on us to pursue this possibility of achieving a higher price for our stockholders.”

Haier, the largest appliance maker in China, already sells its products in the United States but might do even better by acquiring a highly regarded brand and combining it with low-cost manufacturing. Haier already has a plant in South Carolina, according to The Wall Street Journal, which added that concerns have been raised that Haier will move many manufacturing jobs offshore.

It has also been widely reported that CNOOC, China’s state-run energy company, is mulling a higher bid for Unocal, which has already agreed to be sold to Chevron for $16 billion. CNOOC is in a position to make such an offer because oil, which is hovering near its all-time high price, is traded in dollars, and China has been pegging its currency, the yuan, to the U.S. dollar.

If the CNOOC acquisition were ultimately completed, it would be the biggest abroad by a Chinese company, according to Reuters. But a deal for Unocal is not a sure thing even if CNOOC chose to move forward; Reuters pointed out that two California lawmakers have urged the Bush administration to review and possibly block the bid.

And in the “turnabout is fair play” department: Reuters reported from Shanghai that home improvement retailer Home Depot Inc. is negotiating the purchase of a stake in Orient Group Inc., a similar Chinese company, for as much as $500 million.