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Electrolux in a spin over failed GE deal

Monday, December 07, 2015 - 01:35

Shares in Sweden's Electrolux have slumped more than 10 percent after a $3.3 billion deal to buy General Electric's appliance business fell through. Sonia Legg reports.

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It was supposed to double sales in the United States and step up the challenge to arch rival Whirlpool. But instead it's Electrolux that's in a spin after a $3.3 billion plan to buy General Electric's appliance business fell through. The U.S. Department of Justice said the deal would reduce competition and drive up prices, and asked a federal court to prevent it going ahead. GE pulled the plug while the lawyers were still arguing and shares in the Swedish firm slumped 12 percent. Simon French is Chief Economist at Panmure Gordon. (SOUNDBITE) (English) PANMURE GORDON, CHIEF ECONOMIST, SIMON FRENCH, SAYING: "Another impact of these very low interest rates to encourage aggregation, consolidation in some sectors which actually won't be in the customers overall interest and I'm not surprised this have fallen into regulatory hurdles . I think we'll see more and more of that going forward as governments across the globe really prefer to see a competitive market place with multiple players." The move has left the maker of Frigidaire, Kenmore and Tappan appliances with costly bills to swallow in its fourth quarter and a strategy in tatters. It must also pay a termination fee of $175 million. CEO Keith McLoughlin was "disappointed but not defeated", saying he hoped to continue to have "a strong M&A process". What that means isn't entirely clear. A GE tie-up would have made Electrolux the world's biggest appliance maker, ahead of Whirlpool. And it would have strengthened its position in North America where it currently makes a third of its sales

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Electrolux in a spin over failed GE deal

Monday, December 07, 2015 - 01:35