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 Announcing the deal in autumn last year, Electrolux said its biggest
ever acquisition would double its sales in the United States and
step up the challenge to arch rival Whirlpool in the world's largest
appliance market.
But the U.S. Department of Justice (DOJ) said the deal would reduce
competition and drive up prices, and asked a federal court in July
to stop it from going ahead.
Electrolux, which makes Frigidaire, Kenmore and Tappan appliances,
and the DOJ were arguing in court when GE pulled the plug, leaving
the Swedish firm's U.S. strategy in tatters.
"It is a major disappointment for Electrolux," said Handelsbanken
Capital Markets analyst Karri Rinta.
Shares in Electrolux were down 11.9 percent at 210.5 crowns at 1030
GMT, the biggest fall by a European blue-chip stock.
"We're disappointed but we're certainly not defeated," Electrolux
CEO Keith McLoughlin told a conference call. "It is a very large,
global market that is growing, and we believe that Electrolux is
well positioned to participate in that growth."
McLoughlin said the company would "continue to have a strong, robust
M&A (mergers and acquisitions) process", without elaborating.
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.
COSTS
The acquisition of GE's appliance business would have seen
Electrolux leapfrog Whirlpool as the world's biggest appliances
maker, strengthening its position in North and South America.
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David Hallden at UBS, one of few analysts with a negative view on
the GE deal due to the price, said Electrolux should look to grow
its existing businesses in a robust U.S. market and a gradually
recovering European one.
"I think Electrolux should resist any temptation on acquisitions,"
said Hallden, who has a sell recommendation on Electrolux stock and
a target price of 205 crowns.
The Swedish company said GE had requested it to pay out a
termination fee of $175 million that was part of the transaction
agreement.
It said fourth-quarter results would include about 175 million
crowns of transaction and integration costs and would be hit by
about 225 million crowns of costs arising from a bridge facility
intended to finance the deal .
($1 = 8.5125 Swedish crowns)
(Additional reporting by Olof Swahnberg, Violette Goarant and Johan
Sennero; Editing by Niklas Pollard and Mark Potter)
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