General Electric Co. (GE) called off $3.3 billion deal to sell appliance unit with Sweden's Electrolux AB. This deal was originally opposed by U.S. regulators specifically from the Justice Department based on antitrust issues and competition.
GE announced that it will continue to transact with other suitors for its appliance business but decided to keep mum on who these companies are.
Meanwhile, the company is entitled to a break-up fee of $175 million from Electrolux. "The appliances business is performing well and GE will continue to run the business while it pursues a sale," GE explained in its website.
GE offered no explanation of the reason behind the decision but issues swirled since the U.S. Department of Justice (DOJ) had sued the companies involved in the deal. Country's regulators said that it would push an increase on appliance prices by as much as 5 percent.
According to the agency, GE, Electrolux and Whirlpool (WHR.N) make up around 90 percent of all kitchen appliances sold in the country. If the two companies will pursue with the deal, prices would definitely increase.
According to DOJ's Antitrust division, the deal is bad for millions of consumers 'who buy cooking appliances'. It said that the deal will mean that prices will increase making it hard for consumers to buy.
Electrolux was disappointed with the sudden move by GE. "Although we are disappointed that the acquisition will not be completed, Electrolux is confident that (it) has strong capabilities to continue to grow and develop its position as a global appliances manufacturer," Electrolux Chief Executive Officer Keith McLoughlin said.
The proposed acquisition was made public on Sept. 8, 2014 but after DOJ sued both companies, Electrolux exerted efforts to receive regulatory approvals. The company proposed settlement proposals to address competition concerns but all were rejected by DOJ.
"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," McLoughlin said.
"Major Appliances North America has a strong presence in the US under the brands Frigidaire and Electrolux, and we are confident that this position will be maintained and strengthened," he added.
Photo: Rafael Castillo | Flickr
