Electrolux shares fall as GE pulls plug on appliance sale
Shares in Sweden's Electrolux slumped more than 10pc yesterday after a $3.3bn (€3bn) deal to buy General Electric's appliance business fell through.
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 US 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 US strategy in tatters.
"It is a major disappointment for Electrolux," said Handelsbanken Capital Markets analyst Karri Rinta.
Shares in Electrolux were down 11.9pc at 210.5 crowns, 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 mergers and acquisitions process", without elaborating.
In 2014, Electrolux made around 33pc of its 112bn Swedish crowns (€12bn) of sales in North America against around 35pc in Europe.
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.
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 US market and a gradually recovering European one. (Reuters)