Whirlpool (NYSE: WHR) 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.
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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.
