GE Calls off $3 Billion Sale of Appliance Unit

Antitrust regulators had sued to block the sale to Sweden's Electrolux, saying it would harm millions of consumers.
Matthew HellerDecember 8, 2015

General Electric has backed out of a deal to sell its appliance division to Sweden’s Electrolux because of opposition from U.S. antitrust regulators.

The Justice Department sued to block the deal in July, saying it would lead to less competition and higher prices for buyers of stoves, ovens, and other kitchen appliances. The lawsuit went to trial last month but, rather than wait for a verdict, GE used its right to terminate the sale.

“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,” Justice Department lawyer David Gelfand said Monday.

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Electrolux, which was seeking to expand its reach in North America, said it had “made extensive efforts to obtain regulatory approvals, and regrets that GE has terminated the agreement while the court procedure is still pending.”

With the collapse of the deal, GE may be entitled to a $175 million breakup fee, the Wall Street Journal reported.

The deal would have combined Electrolux’s Frigidaire, one of the best-known brands of refrigerators, with GE’s stable of products, including its Monogram line of luxury appliances. “We disagree with the Department of Justice’s narrow view on a transaction that would have benefited consumers,” GE said.

Electrolux CEO Keith McLoughlin testified in the antitrust trial that the GE acquisition was “absolutely critical” for Electrolux’s business. But according to Bloomberg, he indicated Monday that the company will now turn its attention to unearthing potential acquisitions in Latin America and other emerging markets.

“We’re not going to back up here,” McLoughlin said. “It’s rather accelerate forward. If we see an opportunity to make a transformational move, we’re not afraid to do that.”

For its part, GE has pledged to find another buyer for the century-old appliance division, which derives more than 90% of its revenue from North America. The company has been transitioning away from from retail goods and toward its high-tech, heavy-industry units.

“The appliances business is performing well and GE will continue to run the business while it pursues a sale,” GE said.