|
 GE said it would pursue other suitors for its century-old
appliance unit but declined to say who they might be.
"The appliances business is performing well and GE will continue to
run the business while it pursues a sale," the company said in a
statement.
Shares of Electrolux, which sought to double its U.S. sales with the
purchase, tumbled on the news, and the company said it will now
focus on developing existing brands such as Frigidaire, Kenmore and
Tappan and could look at other acquisitions.
The U.S. Justice Department had filed a lawsuit in July asking a
judge to stop the deal, arguing that it would push appliance prices
up by 5 percent. Electrolux, GE and larger competitor Whirlpool <WHR.N>
make up more than 90 percent of major kitchen appliances sold to
homebuilders, according to the lawsuit.
"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," said Deputy Assistant Attorney
General David Gelfand of the department’s Antitrust Division.
This has been a year of megadeals but also a year of aggressive
deals killed by equally aggressive U.S. antitrust authorities.
Dead deals include Comcast's <CMCSA.O> bid to buy Time Warner Cable
<TWC.N>, Sysco's <SYY.N> plan to buy US Foods, Thai Union's plan to
buy Bumble Bee tuna and Applied Materials' <AMAT.O> scrapped plan to
merge with Tokyo Electron <8035.T>.
More mergers are under review including two insurance deals, Aetna's
<AET.N> deal for Humana <HUM.N> and Anthem's <ANTM.N> planned merger
with Cigna <CI.N>, along with a deal between Baker Hughes <BHI.N>
and Halliburton <HAL.N> and Staples' <SPLS.O> merger with Office
Depot <ODP.O>.
Electrolux shares fell 13.4 percent to 207 Swedish crowns, the
biggest fall by a European blue-chip stock on Monday. They earlier
touched a 14-month low of 203.2 crowns. GE closed 0.4 percent lower
at $30.37.
FUTURE OF ELECTROLUX
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.
"We're disappointed but we're certainly not defeated," Chief
Executive Keith McLoughlin told a conference call.
He said the firm would "continue to have a strong, robust M&A
(mergers and acquisitions) process", without elaborating.
[to top of second column] |
Some analysts suggested McLaughlin might decide to leave in the face
of the deal collapse.
"I'm not sure how much he will enjoy staying on now that what might
have been his last deal won't go through," Handelsbanken Capital
Markets' Karri Rinta said.
With his family having returned to the United States several years
ago, speculation has been rife McLoughlin, who has been CEO for
almost five years and imported manufacturing practices from the auto
industry to boost profitability, could soon leave.
McLoughlin said in a statement he remained committed to Electrolux
and would continue as CEO.
In 2014, Electrolux made around 33 percent of its 112 billion crowns
($13.2 billion) of sales in North America against around 35 percent
in Europe.
Before the GE deal was announced, Electrolux had been looking to buy
into growth in emerging markets, a strategy it may now revisit.
The Swedish firm said GE had asked it 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.
(Additional reporting by Helena Soderpalm, Olof Swahnberg, Violette
Goarant Johan Sennero,; Editing by Soyoung Kim and Meredith Mazzilli)
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