The Swedish producer Electrolux, reached an agreement with the American producer and will pay $3.3 billion in cash. Both companies are some of the oldest and most experienced in the industry.
Electrolux will maintain the headquarters in Charlotte. GE attempted to sell its appliance unit in 2008. After failing to do so, the company invested $1 billion in new equipment and training. So right now, the Kentucky based plant is a valuable asset to Electrolux. However, the Swedish company has other R&D units in Europe, so American workers were concerned about their jobs. “Charlotte is the headquarters and will be the headquarters,” says Electrolux President and CEO Keith McLoughlin. “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.” Some overlapping jobs may be lost during GE’s appliance unit absorption by Electrolux.
Over 61.000 people are employed by Electrolux globally and 18 percent of them are based in the U.S. GE Appliance has 12.000 employees and roughly 6.000 of them are located in Kentucky.
Electrolux agreed to further use the original GE’s branding for the products. The Swedish company began its activity in 1910 by selling vacuum cleaners. Roughly in the same period, GE founded its appliance unit, one of its oldest divisions. The unit is widely known for the creation of the washing machine, the toaster and the dryer.
Eight years ago, GE attempted to sell its appliance unit without success. Among contenders there were once again Electrolux, LG and Samsung. Due to the magnitude of the deal, the talks leading to the acquisition between Electrolux and GE roughly lasted one whole year, with intensification in the last half of it.
Electrolux’s overall revenue for 2013 was about $15 billion, while in the case of GE’s appliance unit that was %5.7 billion. The Swedish company acquired the Italian producer Zanussi in 1984, after which it became the largest European household appliances producer. After 2000, Electrolux made a comeback to the American market, by reacquiring its own brand name, sold in 1968. The biggest remaining competitor from now on is Whirlpool Corporation.
Electrolux bought GE Appliance, but the deal is expected to receive approval from regulators in 2015. If Electrolux fails to finalize the transaction, it will support a $175 million termination fee.
