Daily Management Review

Strong Opposition from US Antitrust Regulators Forces GE to Call off Electrolux Deal


12/08/2015




Strong Opposition from US Antitrust Regulators Forces GE to Call off Electrolux Deal
Following months of opposition from U.S. antitrust regulators, a possible deal to sell off appliances business to Sweden's Electrolux was cancelled by General Electric.  The deal was worth $3.3 billion.
 
GE said it they would enter into talks with 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.
  
In the face of falling share prices of Electrolux after the news of the failed deal, the company said it will now focus on developing existing brands such as Frigidaire, Kenmore and Tappan and could look at other acquisitions. Electrolux had hoped to double its U.S. sales with the purchase of the GE business.
 
Arguing that the deal would push appliance prices up by 5 percent, the U.S. Justice Department had filed a lawsuit in July asking a judge to stop the deal.
 
More than 90 percent of major kitchen appliances sold to homebuilders in the US comprise of Electrolux, GE and larger competitor Whirlpool, 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.
 
While 2015 has been a year of mega deals, there have also been some mega cancellations of deals prompted by the opposition from an equally aggressive U.S. antitrust authority.
 
Comcast's bid to buy Time Warner Cable, Sysco's plan to buy US Foods, Thai Union's plan to buy Bumble Bee tuna and Applied Materials' plan to merge with Tokyo Electron were some of the deals that had to be cancelled owing to pressure from US regulators.
  
Aetna's deal for Humana and Anthem's planned merger with Cigna are two of more mergers are under review. Other deals that are being scanned include a deal between Baker Hughes and Halliburton and Staples' merger with Office Depot.
 
The Swiss company stocks fell by 13.4% following the news of the cancellation of the deal. The shares of GE also fell by 0.4%.
 
Electrolux would have become the world's biggest appliances maker – ahead of Whirlpool, had the deal with GE appliance gone through it would also have strengthened 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.
 
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.
 
Speculation has been rife about McLoughlin, who has been CEO for almost five years and imported manufacturing practices from the auto industry to boost profitability, could soon leave as his family had returned to the United States several years ago.
 
(Source:www.reuters.com) 






Science & Technology

Hundreds Of Thousands Of Routers Have Been Hacked By Russians, Warns The FBI

Chinese Study Claims Heart Diseases Can Be Reduced By Having An Egg A Day

Asteroid mining: Reality or fiction?

3D Printing Used For Life Saving Kidney Transplant In Two Year Old At U.K. NHS

California to require solar panels for new homes by 2020

Blockchain Enables De Beers To Track Diamond From The Miner To The Retailer

Microsoft releases Windows 10’s April 2018 Update

DNA Sequencing Project Proposed For All Complex Life Forms On Earth By An Int’l Team

Facebook may start production of its own microprocessors

Long-Term Alcohol Monitoring Could Be Possible With A New Injectable Chip Developed By U.S. Researchers

World Politics

World & Politics

The British government is trying to unblock money to pay off the national debt

Ministerial Visit From India To North Korea Aimed At Strengthening Ties

What countries are the biggest losers of Trump’s Iran decision?

World's Oldest Elected Prime Minister Is Malaysia’s 92 Year Old Mahathir Mohamad

Why Is U.S. Pulling Out Of The Iran Deal A Big Deal For The World

Merkel, Macron, May call on Iran to adhere to the nuclear deal

Arab Region Driven In ‘Wrong Direction’ In Last 10 Years, Say Arab Your: Survey

German doctors demand a tax on sugar