General Electric Company (NYSE:GE) announced today that it will no longer be pursuing the much-awaited sale of its appliances business to Electrolux.
Advertisement
Under the transaction agreement, Electrolux is required to pay to GE a termination fee of $175m under certain circumstances and GE has requested pay-out of the amount.
GE will seek an alternative buyer for the appliance division, which is “performing well”, the Fairfield, Connecticut-based company said in a statement.
Electrolux needed the GE deal to gain scale in the key USA market after acquiring the iconic Frigidaire brand. WHR, +1.64% said it regretted GE’s decision to walk away from the deal while antitrust proceedings were still underway.
General Electric (“GE”) has notified Electrolux that it has terminated the agreement pursuant to which Electrolux had agreed to acquire the appliance business of GE.
The Swedish company said settlement proposals that it considered to be reasonable were offered to federal regulators and would have addressed concerns about competition, but the Department of Justice rejected those proposals.
“The strategy to grow profitably in promising segments, product categories and emerging markets remains”.
In 2014, Electrolux made around 33 percent of its 112 billion Swedish crowns ($13.2 billion) of sales in North America against around 35 percent in Europe.
Monday’s announcement took some analysts by surprise.
Advertisement
Electrolux maintains that companies such as Samsung and LG Electronics are moving into the USA market for appliances, diluting its market power. The conference will be chaired by Keith McLoughlin, President and CEO of Electrolux. In the fourth quarter, transaction costs and integration costs would be about 175 million kronor while results for that period would also be hit by costs of about 225 million kronor from a bridge loan facility.
