GE calls off $3.3 bn appliances deal with Electrolux on regulatory fears
08 December 2015
US engineering and technology giant General Electric on Monday announced the termination of a $3.3 billion agreement to sell its appliances business to Sweden's Electrolux, on the back of opposition from US anti-trust regulators.
GE's decision, which effectively stymies the Swedish firm's plan to bolster its US business, sent Electrolux shares down as much as 15 per cent.
The acquisition of GE's appliance business would have catapulted Electrolux as the world's biggest appliances maker, overtaking Whirlpool as it strengthens its position in North and South America.
Electrolux, however, said it would focus instead on developing existing brands such as Frigidaire, Kenmore and Tappan and could look at other acquisitions.
Electrolux said around 33 per cent of its 112 billion crowns ($13.2 billion) sales in 2014 came from North America against around 35 per cent in Europe.
Electrolux, which put had off plans to buy into growth in emerging markets, may now revisit that strategy.
GE, on the other hand, said it was entitled to a break-up fee of $175 million from Electrolux. The appliances business is performing well and GE will continue to run the business while it pursues a sale, it added.
"The appliances business is performing well and GE will continue to run the business while it pursues a sale," the company said in a statement.
The US Justice Department had filed a lawsuit in July asking a judge to stop the deal, arguing that it would push appliance prices up by 5 per cent. Electrolux, GE and larger competitor Whirlpool make up more than 90 per cent of major kitchen appliances sold to homebuilders, according to the lawsuit.
"This deal was bad for the millions of consumers who buy cooking appliances every year. Electrolux and General Electric could not overcome that reality at trial," said deputy assistant attorney general David Gelfand of the department's antitrust division.
US antitrust authorities have foiled merger and acquisition deals, including Comcast's bid to buy Time Warner Cable, Sysco's plan to buy US Foods, Thai Union's plan to buy Bumble Bee Tuna and Applied Materials' plan to merge with Tokyo Electron, so far this year.
Other deal under regulatory scanner include two insurance deals, Aetna's deal for Humana and Anthem's planned merger with Cigna, along with a deal between Baker Hughes and Halliburton and Staples' merger with Office Depot.