GE ends $3.3B appliance business sale to Electrolux

Deal scuttled after opposition to the loss of competition from US regulators

December 8, 2015   by ASSOCIATED PRESS

FAIRFIELD, Conn. — GE has scrapped a $3.3 billion plan to sell its home appliance business to the Swedish company Electrolux, a deal opposed by US regulators over concerns about competition.

The Fairfield, Conn., conglomerate offered no reason for its decision in a brief statement but said it will continue to run the business as it looks for other options to sell it.

Electrolux is the world’s second-biggest home appliance maker after US rival Whirlpool. It sells most of its products in the US under the Frigidaire brand.

The US Department of Justice had sued to stop the deal in July, saying the deal would have eliminated a major competitor and left Electrolux and Whirlpool as the only big companies in the US selling cooking appliances such as ovens and ranges.

David Gelfand, deputy assistant attorney general at the Justice Department’s antitrust division, said in a conference call Monday that had the deal gone through, Electrolux would have manufactured more than 70% of affordable ranges sold in the US, leading to higher prices for consumers.

Electrolux said it “regrets that GE has terminated the agreement while the court procedure is still pending.”

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 Justice Department rejected those proposals.

An antitrust attorney representing Electrolux downplayed competitive concerns by noting that Asian brands like Samsung and LG have rapidly increased their share of the large appliance market over the past decade. The attorney also said huge retailers like Home Depot and major home builders can pressure manufacturers to keep prices low and competition intense.

GE has been selling parts of its portfolio as it pushes to focus more on core industrial businesses that make large, complicated equipment for other companies.

GE “couldn’t get around” the antitrust issues in the Electrolux deal, said Nick Heymann, an analyst at William Blair and Co., but its home appliance business is doing well and Samsung or LG could be prospective buyers.

The scrapped deal is a “minor roadblock” in GE’s business shift, and the unit will eventually be sold, said Jeff Windau, an analyst at Edward Jones.

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