Electrolux US strategy ‘in tatters’ as deal to General Electric’s appliance business collapses

Electrolux shares slumped more than 10% yesterday after a $3.3bn (€2.93bn) deal to buy General Electric’s appliance business fell through.

Electrolux US strategy ‘in tatters’ as deal to General Electric’s appliance business collapses

Announcing the deal in autumn last year, Sweden’s Electrolux said its biggest ever acquisition would double its sales in the US and step up the challenge to arch rival Whirlpool in the world’s largest appliance market.

However, the US Department of Justice said the deal would reduce competition and drive up prices, and asked a federal court in July to stop it from going ahead.

Electrolux, which makes Frigidaire, Kenmore, and Tappan appliances, and the Justice Department were arguing in court when GE pulled the plug, leaving the Swedish firm’s US strategy in tatters.

“We’re disappointed but we’re certainly not defeated,” said Electrolux CEO Keith McLoughlin.

In 2014, Electrolux made about 33% of its 112bn Swedish crowns (€12.1bn) of sales in North America against around 35% in Europe.

The acquisition of GE’s appliance business would have seen Electrolux leapfrog Whirlpool as the world’s biggest appliances maker.

The US Justice Department had filed a lawsuit in July asking a judge to stop the deal, arguing it would push appliance prices up 5%.

“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 antitrust division.

Reuters

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