Electrolux takes on Whirlpool in U.S. with $3.3 billion GE Appliances buy
By Simon Johnson and Sven Nordenstam
STOCKHOLM (Reuters) - Sweden's Electrolux AB (ELUXb.ST: Quote) said on Monday it would double U.S. sales by paying $3.3 billion in cash for General Electric Co's (GE.N: Quote) appliances business in its biggest ever deal, giving it the scale to go head-to-head with larger rival Whirlpool (WHR.N: Quote).
GE's century-old household appliance business, which had $5.7 billion in 2013 revenue, could help the Swedish company expand beyond its core European market, where growth has trailed that in North America.
Electrolux, the world's second-largest appliance maker by sales, will see its annual sales in North America more than double to over $10 billion, similar in size to Whirlpool's sales there. It also gets to keep the iconic GE Appliance brands.
The GE unit sells refrigerators, stoves, air conditioners and water heaters under the GE Monogram, GE Cafe and Hotpoint brands.
"I think it's a historic event for Electrolux. I'm very excited about it. I think the fit - the strategic fit, the industrial logic - is compelling," Electrolux Chief Executive Keith McLoughlin told Reuters.
While the price tag is higher than the $2 billion to $2.5 billion figure that some people familiar with the business had estimated, analysts said the company was not overpaying. The deal includes GE's 48.4 percent stake in Mexican appliance maker Mabe.
Reuters reported last week that Electrolux was near a deal to buy the GE business for more than $2.5 billion.
The deal is likely to clear antitrust hurdles in the United States, with some asset sales possible to ensure that it complies with antitrust law, according to three experts. Continued...