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Electrolux to Acquire GE Appliances for $3.3 Billion

AB Electrolux is set to acquire the appliances business of General Electric for $3.3 billion in cash. GE Appliances is a manufacturer of kitchen and laundry products in the United States.

Keith McLoughlin, President and CEO of Electrolux commented on the purchase:

“GE’s premium, high-quality appliances complement our own iconic brands and will enhance our presence in North America.

“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.”

“GE Appliances is a well-run operation with strong capabilities in key areas such as R&D, engineering, supply chain and customer service, and we look forward to joining forces with their team of talented and competent people.”

The transaction is expected to generate annual cost synergies of approximately US $300 million. One-off implementation costs and capital expenditures are estimated to US $300 million and US $50-70 million respectively. The largest parts of the synergies are expected in sourcing, operations, logistics and brands.

GE Appliances is headquartered in Louisville, Kentucky, and generates more than 90% of its revenue in North America. The company operates its own distribution and logistics network and has nine well-invested manufacturing facilities with 12,000 employees.

The acquisition by Electrolux includes a 48.4% shareholding in the Mexican appliance company Mabe. For nearly 30 years, GE Appliances has had a joint venture with Mabe in Mexico where Mabe develops and manufactures portions of GE Appliances’ product offering.

In 2013, GE Appliances had sales of US $5.7 billion and an EBITDA of US $390 million including share of income from Mabe.

The acquisition of GE Appliances will be funded by a committed bridge facility arranged by Deutsche Bank AG and Skandinaviska Enskilda Banken AB (publ). The bridge facility is planned to gradually be replaced by capital market and bank financing (approximately 75%) and a rights issue (approximately 25%).

General Electric said the move was part of a strategic plan to strengthen its business in infrastructure and technology, moving away from media, plastics and insurance to higher-growth, higher-margin businesses including oil & gas, power, aviation and healthcare.

About Business Desk

Business Desk
Editors and staff from the Business Desk at The Global Herald.

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