Electrolux’s $3.3 billion acquisition of GE Appliances falls through
STOCKHOLM – Sweden’s Electrolux said on Monday its deal to buy General Electric’s appliance business had fallen through after GE terminated the $3.3 billion (2.1 billion pound) agreement with shares in Electrolux expected to fall sharply when they open.
The US Department of Justice asked a federal court in July to stop Electrolux, which makes Frigidaire, Kenmore and Tappan appliances, from buying GE’s appliance business and has said the deal would push prices up by five percent.
“Electrolux has made extensive efforts to obtain regulatory approvals, and regrets that GE has terminated the agreement while the court procedure is still pending,” Electrolux said in a statement.
Electrolux said its strategy to grow profitably in promising segments, product categories and emerging markets was unchanged. “The Group’s operations in North America have proved to be strong on its own merits, with good organic growth and a recovery in earnings during 2015,” it said.
The US agency has argued that Electrolux and GE, along with Whirlpool Corp (WHR.N), make 90 percent of the stoves and ovens sold to big builders and property managers in the United States.
The department said the proposed deal violates US antitrust law. “I think the share (Electrolux) will fall at least 10 percent,” said Jonas Olavi, analyst at Alfred Berg.
Electrolux maintains that companies such as Samsung and LG Electronics are moving into the US market for appliances, diluting its market power.
Electrolux said it was prepared to divest assets to appease the DOJ. “Unfortunately, these proposals were rejected by DOJ,” Electrolux said.
Electrolux said that under the transaction agreement, it is required to pay a termination fee of $175 million under certain circumstances. It said GE had requested pay-out of that amount. Electrolux will hold a press conference at 0800 GMT. -Reuters