Haier Group's headquarter in New York--The Haier Building; Haier Group has made a bid to buy Maytag, the third-largest appliance maker in the United States, for US$1.28 billion.

    BEIJING, June 22 -- China's leading home appliance maker Haier Group has made a bid to buy Maytag, the third-largest appliance maker in the United States, for US$1.28 billion.

    Maytag has received a preliminary non-binding proposal from Haier America Trading LLC, private equity companies Bain Capital Partners LLC and Blackstone Capital Partners IV LP, the US company announced yesterday on its website.

    But Haier Group did not give any response yesterday.

    According to Maytag's announcement, the consortium offered to acquire all outstanding shares of Maytag for US$16 per share cash, higher than the previous bid by Ripplewood Holdings LLC.

    On May 19, Maytag had agreed to be acquired by an investor group led by Ripplewood for US$14 per share cash. Maytag's stock has been traded above US$14 a share since May 20 amid speculation it would receive a higher bid.

    The Newton, Iowa-based company, which has 79.7 million shares outstanding as of April 2, said it is considering the proposal.

    "We continue to support the Ripplewood transaction; however, we also believe that it is incumbent on us to pursue this possibility of achieving a higher price for our stockholders," said the company's lead director Howard Clark.

    With a history of more than 100 years, the appliance maker is worth US$4.7 billion and offers a full range of products including washers, dryers, dishwashers and refrigerators under the brand names Maytag, Hoover, Jenn-Air, Amana, Dixie-Narco and Jade.

    It got into trouble because of rising raw material costs, heating competition and its shrinking market share.

    "Haier is looking for a new way to achieve its globalization," said Lu Renbo, an industry expert from the Development Research Centre of the State Council.

    Previously, Haier has expanded its business into the overseas market through establishing manufacturing bases and product exports.

    "Purchasing of a local, big name company may be the best and fastest way for Chinese home appliance makers' global expansion," Lu said.

    With its good established brand names and, especially, well-developed market and sales networks, the purchase of Maytag would give Haier an edge in the US market.

    Haier considers the US a key market and started local production in the US in 2000, producing 500,000 refrigerators a year.

    Haier's intention to buy Maytag follows other big Chinese companies, which look to explore the US market through mergers and acquisitions.

    Leading domestic PC maker Lenovo bought IBM's unprofitable PC business for US$1.25 billion last month. It is also reported that China National Offshore Oil Corp offered US$20 billion to bid for the US energy group.

    "But companies like Haier need to take more consideration on purchasing risks," Lu warned.

    Haier's business scale is still small compared with multinational companies.

    Its competitiveness lies in manufacturing ability, but it is short of capital and technology innovation.

    "All this may cause invisible risks in its future performance after acquiring the loss or even debt-driven big foreign companies," Lu said.

    TCL is a typical example. The domestic home appliance giant lost money after buying the loss-making TV business from French company Thomson last year.

    Haier's share price on the Shanghai stock exchange edged down 1.24 per cent to 4.79 yuan (58 US cents).

    (Source: China Daily)