Sweden’s Electrolux to buy GE appliance unit for $3.3 bn

Sweden's Electrolux today said it would buy General Electric Co's appliances business for $3.3 billion in cash. The deal, which is the company's biggest ever, would double the company's sales in North America and help it take on rival Whirlpool Corp.

Electrolux had said in August that it was in talks to buy the unit to tap into a market where it had lacked scale, and more over as it was witnessing faster growth than Europe.

According a Reuters report earlier this month, a deal was near completion.

"GE's premium, high-quality appliances complement our own iconic brands and will enhance our presence in North America," Electrolux chief executive Keith McLoughlin said in a statement.

"The acquisition, which is our largest ever, strengthens our commitment to the appliance business and also provides Electrolux with the scale and opportunity to accelerate our investments in innovation and global growth."

Electrolux, with brands such as Frigidaire, AEG and Zanussi in addition to its own-named products, is the second-largest home appliance maker in the world after Whirlpool, with Europe as its strongest market.

With the purchase of GE's Appliance's business - including cookers, refrigerators, air conditioners and water heaters - Electrolux's sales would more than double in the US market from the $4.5 billion in 2013, AP reported.

Electrolux shares were up 7 per cent to 200.50 kronor ($28.27) in early trading in Stockholm.

GE had confirmed it was in talks for the sale of its appliances division - maker of the first electric toaster more than 100 years ago - as it looked to focus on sales of more complex and profitable industrial equipment.

According to McLoughlin, the move, which needs regulatory approval and which would likely be completed in 2015, "takes our company to a new level in terms of global reach and market coverage."

Electrolux has plans for a rights issue corresponding to about 25 per cent of the purchase after the completion of the acquisition.

Louisville, Kentucky-headquartered, GE Appliances' products include refrigerators, freezers, cooking products, washers and dryers and air conditioners. The division, which counts a 12,000 strong workforce at nine factories, posted an income of $381 million on $8.3 billion in sales last year, for a profit margin of 4.6 per cent.

"GE Appliances' people, valuable home appliances brand, products, distribution, and service capabilities make it a perfect fit with Electrolux and its goal of accelerating growth in the U.S.," GE chief executive Jeff Immelt said in a joint statement from the two companies.

Electrolux, in July posted a second-quarter net loss of 92 million kronor ($13.5 million), citing large restructuring charges, but said demand in Europe and the US was picking up.