Haier Withdraws Maytag Bid

Move Is Sign of Caution in China's Pursuit of Foreign Firms

SHANGHAI, July 20 -- Haier Group Co., China's largest home-appliance maker and primary aspirant to becoming the country's first global brand, has withdrawn from the bidding for Maytag Corp., according to a statement released by Maytag.

Haier, along with U.S. private equity firms Blackstone Group LP and Bain Capital LLC, had expressed interest in buying the Iowa appliance maker for about $1.3 billion.

Haier's decision to drop out amounts to a rare sign of caution from China as its companies aggressively pursue foreign takeovers and new markets in what Beijing has termed the "go out strategy." Analysts said it indicates that the country's largest companies -- despite their ownership by the Communist Party-led government -- have matured into legitimate commercial enterprises, undermining the notion they can tap the unlimited largesse of the state.

"The go out strategy doesn't mean companies don't care about profits and costs," said Yi Xianrong, an economist at the Chinese Academy of Social Sciences in Beijing. "If it breaks the bottom line, Chinese companies won't do foreign purchases."

Recent weeks have focused attention on the implications of China's global mission as the state-owned energy firm Cnooc Ltd. has pressed its unsolicited $18.5 billion bid to buy U.S.-based Unocal Corp. But most of China's overseas investments have focused on establishing new channels to sell its manufactured goods.

Last year, Lenovo Group Ltd., China's largest computer maker, struck a $1.75 billion deal to take over International Business Machines Corp.'s personal computer business, twinning its ability to make low-cost machines with one of the signature brands in technology. The Chinese consumer electronics firm TCL Corp. purchased the television business of French manufacturer Thomson SA, and with it the rights to the RCA logo.

Analysts saw Haier's interests in Maytag as a continuation of that trend, a deal that would have used the venerable U.S. brand name to sell machines that could be made in the Chinese company's existing factories.

Haier's decision reduces the fight for Maytag to two players: Whirlpool Corp., which Sunday offered to buy the company for about $1.4 billion in cash and stock, and a group of U.S. private equity investment firms led by Ripplewood Holdings LLC. Ripplewood has offered to buy Maytag for about $1.1 billion. Maytag directors have approved Ripplewood's offer and a shareholder vote on that deal is scheduled for Aug. 19. But Maytag has also said that it would consider Whirlpool's higher offer.

White reported from New York. Special correspondents Jason Cai and Eva Woo contributed to this report.