Whirlpool’s stock price jumped about 17 % Wednesday, almost $15, closing at $102, after widely respected news agency Reuters reported that Bosch, the huge German multi-industry firm, was considering a takeover bid for Whirlpool.
That means that hypothetically Bosch would offer to acquire all of Whirlpool’s shares at a price significantly higher than that at which it’s currently been trading. ‘Small premium’ offers are generally rejected by corporate boards, however big premium offers sometimes are accepted, with boards citing their responsibility to maximize shareholder value.
At that point, the target firm ceases to independently exist and becomes a subsidiary or division of the larger entity. The shareholders collect their checks and many go away happy. That may not be the case with employees of the firm being acquired—hypothetically in this case, Whirlpool.
So, what is likely to happen with Whirlpool and Bosch?
The answer is that it’s way too early to tell. If the Bosch offer is deemed ‘serious’, the Whirlpool board would likely fully investigate the details, while pushing for a much higher price than whatever the first offer says. That’s just business—and it’s been known to work well at times, if the potential acquiring firm—‘the hunter’—sees great value in the target firm—‘the prey’.
It’s not hard to see that Whirlpool and its family of brands would be very attractive to Bosch. Appliance industry sources tell us that Bosch makes good appliances, especially dishwashers. However, relatively few respondents say “Bosch” when they’re asked to name leading appliance brands. Many people answer “Whirlpool” or “Maytag” or “KitchenAid” when they’re queried about leading brands in various measurement criteria. That makes the Whirlpool brand family attractive to Bosch, especially at a stock price only about half of Whirlpool’s value a couple of years ago.
In terms of US market sales volume, if Bosch-owned brands and Whirlpool-owned brands were put together under one corporate flag, they would certainly outpace Samsung, LG, and GE brands by a healthy margin. That’s a market share milestone that Bosch would likely be willing to pay a premium to achieve. Whether that premium would be enough to win over the Whirlpool corporate board in a vote is the ‘billion-dollar question’ of the day! And one that will likely take weeks—if not months—to answer.
A question on many minds here in Michigan’s Great Southwest is ‘what might such a corporate takeover mean to our area, economically?’
The answers, of course, are speculation and should clearly be thought of that way. However, we speculate about Sports, and we speculate about Politics, so we may as well speculate about this…
Whirlpool’s operations in Berrien County are divided between ‘global’ and ‘North American’. Some might call it ‘corporate’, ‘research and development’, and ‘operations & marketing’. Bosch has its USA corporate headquarters for its multi-faceted interests in Farmington Hills, near Detroit. It’s not clear if the appliance division operates from there or its manufacturing centers (factories) in New Bern, NC and LaFolette, TN. Whirlpool’s US manufacturing is centered in Ohio at Findlay, Clyde and Marion and Tennessee at Cleveland.
Logically, Whirlpool’s global and corporate headquarters operations would likely be scaled back over time in a Bosch takeover. Brand focused and marketing efforts might be less likely to be targeted, since acquiring these assets is seemingly the core purpose of the acquisition. Some also might argue, with no real evidence but with some logic, that Bosch could be motivated to expand brand development and marketing efforts here, based on Whirlpool’s relative success in those facets of the industry.
In recent years, Whirlpool has dramatically increased its investment in the ‘R & D’ sector. The former plant location on Riverview Drive was re-made into the R & D center for refrigeration several years ago. Work is just being completed on the new Technology Center on Upton Drive, a massive new facility focused on developing the next generation of laundry appliances and dishwashers. It is likely the most advanced facility of its kind in the entire World. A convincing case can be made that an acquiring corporate parent—Bosch—would see these R & D facilities—and the highly trained teams that staff them– as a significant developable asset, rather than something to be trimmed on budget day.
We remind you that much of this piece is speculation on the first day of a story that has NOT been confirmed by either party—Whirlpool or Bosch—and may take weeks or months to play out—if at all.
On the other hand, we’ve given you some facts and perspectives you probably won’t find on your social media page. So, when you speculate on your own, you have a little more to go on than you did five minutes ago.
Stay tuned.
By Gayle Olson, MOTM Contributor
