NEW YORK (Reuters) - Haier Group, China's largest appliance maker, and its two private equity partners have dropped out of the $1 billion-plus bidding race for Maytag Corp., Maytag said on Tuesday.

The group's withdrawal from the bidding leaves two suitors -- private equity firm Ripplewood Holdings and larger appliance maker Whirlpool Corp. -- vying for the struggling U.S. company, whose iconic brands include Jenn-Air and Hoover.

Maytag shares, which had zoomed past Whirlpool's $17 a share offer on expectations of a bidding war, fell 2 percent to $17.15 in after-hours trade on Tuesday.

"Haier certainly liked the idea of buying Maytag, but we believe it learned in the due diligence just how much of a challenge integrating this business would be," said Eric Bosshard, an analyst with FTN Midwest Securities, who follows both Maytag and Whirlpool.

"While it appears to be down to Whirlpool and Ripplewood, we believe (Maytag's) board will have a hard time turning down the sure thing from Ripplewood for the upside bid with uncertainty from (Whirlpool)," Bosshard said in an e-mail.

Maytag's board will meet later this week to decide if it wants to pursue Whirlpool's offer, according to sources.

In May, an investor group led by Ripplewood, a New York-based private equity firm, submitted a bid to buy Maytag for $1.1 billion, or $14 a share.

A month later, Maytag said that Haier and two private equity firms -- Bain Capital and The Blackstone Group -- were exploring a $16 a share bid for the company.

Then Whirlpool launched a surprise offer on Sunday for more than $1.3 billion, or $17 a share. Whirlpool, which also has the Roper and KitchenAid brands, said it would pay at least 50 percent in cash and the balance in shares.

The Whirlpool offer values Maytag at about 35 times expected 2005 earnings of 49 cents a share. That's almost three times Whirlpool's forward PE of 12.

Whirlpool has downplayed antitrust concerns, saying regulatory approval for the deal would be quite possible.

The prospect of a Haier takeover helped stir anti-Chinese sentiment in the U.S. over Asian companies gobbling up U.S. businesses. That concern has been stoked by a bid by China oil company CNOOC Ltd. to buy California-based Unocal Corp. for $18.5 billion.

The Haier group was expected to decide whether to submit a formal bid within the next few weeks.

That speculation ended on Tuesday, when Haier, Bain and Blackstone submitted a formal letter to Maytag, saying that the group has decided not to pursue an offer, according to a source who saw a copy of the letter.

Maytag has set an Aug. 19 shareholder vote in its hometown of Newton, Iowa, to vote on the Ripplewood deal. Ripplewood's group, Triton Acquisition Holding, includes Goldman Sach's GS Capital Partners and the J. Rothschild Group.

Whirlpool's stock on Tuesday rose 2.9 percent, or $2.12, to a one-and-a-half year high of $75.43.

The 112-year-old Maytag had a loss of $9 million last year as sales slipped 1.5 percent to $4.7 billion. Whirlpool, founded in 1911, earned $406 million last year on sales of $13.2 billion.

Maytag's profitability has declined amid a slump at its Hoover unit, higher raw materials prices and competition from Asian rivals with lower costs.