The U.S. appliance manufacturer is the subject of deal speculation.
Whirlpool (WHR 17.10%) is reportedly a potential acquisition target for a German industrial conglomerate.
Shares of the U.S. appliance maker traded up as much as 19% on Wednesday, and were up 15% as of 11 a.m. based on speculation that a potential offer with a premium could appear.
Is Bosch weighing a move?
Whirlpool is one of the largest manufacturers of home appliances based in the United States, with a business increasingly under pressure from foreign rivals. In recent years, the company has divested its Middle Eastern and African operations and formed a joint venture to manage its European business, part of a plan to conserve cash and fight off competition in its home markets.
German engineering group Robert Bosch apparently sees Whirlpool as a potential way to build its own appliance operations. According to Reuters, Bosch has been talking to potential advisors about the possibility of a bid for Whirlpool.
The report says it is not certain an offer would be made, or whether Bosch would be willing to pay a significant premium over Whirlpool’s current $5 billion market capitalization. But the acquisition would make sense, and investors are bidding up shares of Whirlpool today in hopes Bosch will move forward with a deal.
Is Whirlpool stock a buy?
Bosch, the world’s largest auto parts manufacturer, is apparently on the hunt for U.S. assets. Earlier this year, the company was also rumored to be taking a look at the heating and air-conditioning assets of Johnson Controls International.
That said, there is a big difference between pondering a deal and actually completing a transaction. Investors buying into Whirlpool now in anticipation of a potential deal are already paying a premium compared to the share price yesterday, and absent indications that Bosch is moving forward, the stock is likely to come under pressure in the weeks to come.
As a long-term stand-alone, Whirlpool faces a tough competitive environment and a sluggish market for big-ticket items.
Investors would be well advised to watch this story play out from the sidelines.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
