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Whirlpool Corp. and Maytag Corp. said Thursday they have complied with the government’s second request in the antitrust review of the $1.4 billion merger. A close reading of the announcement reveals several troubling developments. Whirlpool said it would not close the Maytag deal before Feb. 27 without Department of Justice approval. And the company did not clearly state that the agency agrees the partners are in compliance, which left risk arbitrageurs assuming the agency has not opined on the matter. The deal spread narrowed initially Thursday by about 25 cents to roughly $3, or 16 percent. If the deal closed in late February, the spread currently offered an annualized return of roughly 80 percent. The only thing that seems clear from the Whirlpool statement is that the government implied it would sue to block the deal if Whirlpool claimed it could close in 30 days, which is the statutory time allotment after certifying compliance with a second request. Whirlpool allowed that the DOJ may seek an extension to the transaction’s timetable. Since the companies complied with the request relatively quickly, it’s possible the DOJ staff has only recently received the documents and could not know for weeks whether the companies had satisfied the request, antitrust experts said. Some antitrust advisers simply like to control the clock and are more disposed to pressing for compliance, one source said. Howrey, Whirlpool’s law firm, did not return a call. One concern has been the potential inclusion of the Kenmore brand, which Maytag manufactures. A combined Maytag and Whirlpool could have additional market power if they control Kenmore appliances, which are sold in Sears Holdings Corp. stores. But there are a number of manufacturers competing for the Kenmore business, an antitrust source said. Sears does not seem to care about the deal, he added. Other sources think Sears actually favors the merger, which could be problematic. The antitrust review comes down to whether Sears and other retailers have played Maytag and Whirlpool off each other, an attorney said. If the deal runs into problems, it may not be from big-box retailers, an attorney said. It may be easier for competitors to get products into the Best Buy Co. and Home Depot Inc. outlets than the distribution channels to smaller stores, which represent about 35 percent of the market, he said. In either case, Whirlpool would not have attempted to certify compliance if it did not think it had a problem that needed to be pushed to the fore, the attorney said. Copyright �2005 TDD, LLC. All rights reserved.

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