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)
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)
