General Electric Backtracks On Appliance Unit Sale (NYSE:GE)

General Electric has announced that the planned sale of its appliance unit to Electrolux has been canceled. The companies agreed to the transaction in September 2014. Under the terms of the deal, Electrolux would had to pay General Electric a termination fee of $175 million. Shares of Electrolux fell 15 percent to 200 Swedish kronor, or about $23.40, after the cancellation of the deal was announced. General Electric shares fell 0.4 percent.

The company had planned to sell its century-old appliance division to the Swedish company for $3.3 billion in an all cash deal. The purchase would have allowed Electrolux to expand its reach in North America, one of the largest markets for home appliances, by combining Electrolux’s Frigidaire, one of the best-known brands of refrigerators, with General Electric’s stable of products. Sales of major appliances in North America accounted for about 30 percent of Electrolux’s revenue in 2014.

The deal was canceled after the United States Justice Department moved to block the transaction. In July, Justice Department sued to stop the deal saying it would lead to less competition and higher prices for buyers. Electrolux said settlement proposals were offered to the Justice Department to address competition concerns, but those proposals were rejected. General Electric said in a statement that it disagreed with the Department of Justice’s narrow view of the transaction.

The unit, G.E. Appliances, based in Louisville, Ky., employs about 12,000 people and derives more than 90 percent of its revenue from North America. This was the second time in recent years that General Electric has tried to sell the division. General Electric also tried to sell the appliance division seven years ago, but those talks fell apart with the onset of the financial crisis. The company has been selling off business units as it refocuses on its core industrial businesses.

The transaction would have been the largest ever for Electrolux. Electrolux is currently one of the world’s biggest manufacturers of home appliances and industrial equipment. Electrolux began as a maker of vacuum cleaners in the early 1900s and expanded into home appliances in the 1920s. The company posted revenue of about $13 billion last year.

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