Electrolux cuts jobs on collapse of General Electric Co appliance deal

Electrolux will cut costs and jobs and pay a breakup fee to General Electric Co after the collapse this week of the Swedish manufacturer’s $3.3 billion (€3bn) deal to buy the US company’s household appliance business.

Electrolux will reduce costs at its small-appliances division to save an expected 120 million kronor (€12.9m) annually starting at the end of next year, the Stockholm-based company said.

Costs related to the programme will amount to 190m kronor, with staff reductions and reduced operations in the US, Sweden and China.

The plan comes because of “reduced volumes in several key markets” and currency fluctuations, the company said.

When completed, the small appliance business will be able to invest in profitable products.

The GE deal would have allowed Electrolux, the maker of Frigidaire appliances, to better compete with Whirlpool and Asian manufacturers.

GE said it was abandoning the deal because of opposition from US regulators, who had sued to block the transaction.

A judge had begun hearing arguments from both sides.

Electrolux will pay GE a breakup fee of $175m, and transaction and integration costs from the failed deal will be about 175m kronor in the fourth quarter.

Expenses related to a bridge loan will be 225m kronor, the company said.