Case Detail

Case Summary

Maytag: Takeover Strategies

Case Number: 5-208-258, Year Published: 2008

HBS Number: KEL382

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Authors: Artur Raviv; Rod N. Feuer; Parth Mehrotra; Peter Rossmann

Key Concepts

Mergers and Acquisitions, Private Equity, Valuation, Strategic Buyer, M&A

Abstract

On April 22, 2005, Maytag Corporation’s stock price fell 28 percent after the company reported disappointing first-quarter results and significantly reduced its earnings outlook for 2005. The company’s sales were declining due to increased foreign competition and its production costs were increasing due to higher energy, materials, and distribution costs. Maytag’s management and board clearly understood the need to make strategic decisions to turn around the fate of their company. Maytag could propose a drastic turnaround plan and remain independent, sell itself to either a large domestic competitor such as Whirlpool or a foreign firm such as Haier, or it could choose to go private by selling to a financial buyer (Ripplewood).

Learning Objectives

This case is designed to introduce and to practice concepts relating to the valuation of an acquisition target from the perspectives of a strategic investor and a private equity (leveraged buyout) firm. More specifically, the exercise is intended to address: (1) corporate strategy relating to takeover contests, (2) sources of value creation in acquisitions, and (3) valuation methodologies used to determine target company values.

Number of Pages: 17

Extended Case Information

Teaching Areas: Finance

Geographic: United States

Industry: Home Appliance

Organization Name: Maytag

Year of Case: 2005