GE turns down $3.3B Electrolux acquisition
General Electric Co. terminated the agreed $3.3 billion acquisition of Sweden's Electrolux AB on its appliance business.
According to The Wall Street Journal, GE was under pressure by the U.S. Justice Department, which was blocking the sale due to antitrust issues. The electric company succumbed to the pressure the government agency was bombarding it with. GE said it is entitled to the $175 million termination fee it agreed with Electrolux should the deal fail.
"We are disappointed but we are certainly not defeated," said Electrolux Chief Executive Officer Keith McLoughlin. "We are going to review the conditions under which it is payable."
After the sale was pulled of, Reuters reported that Electrolux's ambition to bolster its U.S. operations went down the drain. Its shares also decreased to only 15 percent. According to the Swedish firm, it would just focus on enhancing existing products like the Tappan, Kenmore, and Frigidaire. It is also on the lookout for other acquisitions.
In a report by The New York Times, the deal would have combined the Frigidaire with GE's products, such as Monogram luxury appliances. The sale would have given Electrolux gateway to one of the biggest home appliance markets in the world, which is North America.
The company said, "The appliances business is performing well and GE will continue to run the business while it pursues a sale."
The proposed plan is already problematic since summer this year. That was when U.S. Department of Justice questioned the firm, saying a merger between two appliances giants would result to "less competition, higher prices and fewer options for millions of Americans."
The proposed sale of the GE business was announced in September last year. However, the companies immediately saw that they would have a hard time getting regulatory approval. The transaction would give consumers less options on what appliances to buy, according to the Justice Department sued Electrolux and General Electric.
The deal, according to the government agency would also harm home builders, consumers buying in bulk, and customers looking for appliances that are well under their budget range.