Monday, July 18, 2005
Potential Consolidation News - Whirlpool and Maytag and Xstrata and Inco
A few big consolidations may be shaping up. In the appliance industry, Whirlpool Offers to Buy Maytag for $1.37B: Whirlpool Corp. has offered to buy fellow appliance maker Maytag Corp. for $1.37 billion in cash and stock, topping an earlier offer that Maytag had accepted from an investment group.
Late breaking news ... Whirlpool will be holding a conference call at 11AM this morning.
[next morning] the Toronto Globe & Mail had this take on the issue:
Whirlpool offer for Maytag seen as bid to block Chinese
Whirlpool Corp. has proposed a $1.35-billion (U.S.) bid for Maytag Corp., a move that will help wring out costs by buying the iconic American brand known for washers -- and keep it out of the hands of a low-cost Chinese rival.
But some observers yesterday suggested Whirlpool's move, which would give it almost 50 per cent of the U.S. appliance market, is a defensive tactic.
Analysts see Whirlpool trying to keep Haier from increasing its share in North America by buying the strong Maytag name and combining it with low-wage manufacturing.
But the best comment is buried in here:
David Silver [an analyst] expects Haier to outbid Whirlpool. "I think it [the winning bid] is going to be upwards to $19 a share.," he said.
"Haier can definitely afford to do so," Mr. Silver said. "They are the largest producer of appliances in China, and the Chinese are not as demanding as American investors in that it doesn't have to be every quarter that they see a profit. They are willing to take a loss in one or two quarters to see a large gain in the future."
It's been said before but bears repeating: the (North) American expectation that a company show profit and issue dividents every quarter does not work well for certain types of very long investment ventures, especially heavy industries like steel (and maybe even some medium industries like big stampers). It makes for decisions which are too short term. Ultimately, investor climates where they think longer term (China, Japan) will have an advantage over North America unless we smarten up.
On the drive in to work today, I heard this on the radio ...
Switzerland-based Xstrata may bid for Toronto-based Inco after failing to buy WMC Resources Ltd., Australia's The Age newspaper said today, citing people it didn't name.
Inco spokesman Steve Mitchell said he wasn't aware of the story and declined to comment on the issue. Xstrata also declined to comment.
Nickel prices on the London Metal Exchange averaged $14,715 a metric ton in the past 12 months, compared with $9,578 a ton in the previous five years, on surging demand from China, the world's fastest growing major economy.
Inco, of course, is a major player in the nickel marketplace, and nickel is a major component (cost and otherwise) of stainless steel.
The Xstrata web site says, about themselves, Xstrata maintains a meaningful position in six major international commodity markets: copper, coking coal, thermal coal, ferrochrome, vanadium and zinc, with additional exposures to gold, lead and silver.
Late breaking news ... Whirlpool will be holding a conference call at 11AM this morning.
[next morning] the Toronto Globe & Mail had this take on the issue:
Whirlpool offer for Maytag seen as bid to block Chinese
Whirlpool Corp. has proposed a $1.35-billion (U.S.) bid for Maytag Corp., a move that will help wring out costs by buying the iconic American brand known for washers -- and keep it out of the hands of a low-cost Chinese rival.
But some observers yesterday suggested Whirlpool's move, which would give it almost 50 per cent of the U.S. appliance market, is a defensive tactic.
Analysts see Whirlpool trying to keep Haier from increasing its share in North America by buying the strong Maytag name and combining it with low-wage manufacturing.
But the best comment is buried in here:
David Silver [an analyst] expects Haier to outbid Whirlpool. "I think it [the winning bid] is going to be upwards to $19 a share.," he said.
"Haier can definitely afford to do so," Mr. Silver said. "They are the largest producer of appliances in China, and the Chinese are not as demanding as American investors in that it doesn't have to be every quarter that they see a profit. They are willing to take a loss in one or two quarters to see a large gain in the future."
It's been said before but bears repeating: the (North) American expectation that a company show profit and issue dividents every quarter does not work well for certain types of very long investment ventures, especially heavy industries like steel (and maybe even some medium industries like big stampers). It makes for decisions which are too short term. Ultimately, investor climates where they think longer term (China, Japan) will have an advantage over North America unless we smarten up.
On the drive in to work today, I heard this on the radio ...
Switzerland-based Xstrata may bid for Toronto-based Inco after failing to buy WMC Resources Ltd., Australia's The Age newspaper said today, citing people it didn't name.
Inco spokesman Steve Mitchell said he wasn't aware of the story and declined to comment on the issue. Xstrata also declined to comment.
Nickel prices on the London Metal Exchange averaged $14,715 a metric ton in the past 12 months, compared with $9,578 a ton in the previous five years, on surging demand from China, the world's fastest growing major economy.
Inco, of course, is a major player in the nickel marketplace, and nickel is a major component (cost and otherwise) of stainless steel.
The Xstrata web site says, about themselves, Xstrata maintains a meaningful position in six major international commodity markets: copper, coking coal, thermal coal, ferrochrome, vanadium and zinc, with additional exposures to gold, lead and silver.
