GE scraps $3.3 billion sale of appliances division to Electrolux

The Justice Department had moved to block the sale of GE’s appliance division to Electrolux.
The Justice Department had moved to block the sale of GE’s appliance division to Electrolux.JIM YOUNG/REUTERS/FILE

LONDON — General Electric has called off a deal to sell its century-old appliance division to Electrolux of Sweden for $3.3 billion after the US Justice Department moved to block the transaction, Electrolux said Monday.

It is the second time in recent years that General Electric has tried to sell the division, which gave birth to the washing machine, the clothes dryer, and the toaster oven. The company has shed other units as it refocuses on its core industrial businesses.

The all-cash deal would have combined Electrolux's Frigidaire, one of the best-known brands of refrigerators, with General Electric's stable of products, including its Monogram line of luxury appliances. The purchase would have allowed Electrolux to expand its reach in North America, one of the largest markets for home appliances.


The companies agreed to the transaction in September 2014. The Justice Department sued to stop the deal in July, saying it would lead to less competition and higher prices for buyers of stoves, ovens, and other kitchen appliances.

"We disagree with the Department of Justice's narrow view on a transaction that would have benefitted consumers," General Electric said Monday. "The appliances market is dynamic and highly competitive."

Electrolux said Monday in a news release that it had "made extensive efforts to obtain regulatory approvals, and regrets that GE has terminated the agreement while the court procedure is still pending."

Electrolux said "reasonable" settlement proposals offered to the Justice Department would have addressed competition concerns. "Unfortunately, these proposals were rejected,'' it said.

Under the terms of the deal, Electrolux will now have to pay General Electric a termination fee of $175 million.

Electrolux said Monday that it had also incurred transaction and preparatory costs from January to September this year of 402 million kronor. The company said it expected fourth-quarter transaction and integration costs of about 175 million kronor, and expenses of about 225 million kronor related to a loan facility.


General Electric, based in Fairfield, Conn., tried to sell the appliance division seven years ago, with Electrolux and the Asian appliance manufacturers Samsung and LG among companies taking part in negotiations. But those talks fell apart with the onset of the financial crisis.

The latest transaction would have been the largest ever for Electrolux, which began as a maker of vacuum cleaners in the early 1900s and expanded into home appliances in the 1920s.

The unit in question, GE Appliances, based in Louisville, Ken., derives more than 90 percent of its revenue from North America. Its products include refrigerators, dishwashers, air conditioners, washing machines, dryers, and water heaters. The division employs 12,000 people.

Electrolux, one of the world's biggest manufacturers of home appliances and industrial equipment, posted revenue of about $13 billion last year. GE's appliance and lighting divisions generated $8.4 billion in that period.

Sales of major appliances in North America accounted for about 30 percent of Electrolux's revenue in 2014, the firm said.

"The group's operations in North America have proved to be strong on its own merits, with good organic growth and a recovery in earnings during 2015," Keith R. McLoughlin, Electrolux president, said.