A proposed $3.3 billion merger between General Electric (GE) and Sweden's Electrolux AB has been terminated. The deal sought to sell GE's long-lived appliance division to Electrolux, and to increase Electrolux's presence in North America, one of the largest markets for household appliances.
As of December 7, 2015, GE terminated the proposed merger in the midst of lawsuits from the United States Department of Justice, which cited both companies with antitrust concerns. The Department of Justice argued that this merger would eliminate competition and leave millions of American consumers vulnerable to dramatic price increases on already-expensive, yet fundamental household appliances, such as ovens and refrigerators. The Department of Justice also argued that this merger would create a duopoly in sales of these appliances to builders and commercial buyers, who could then pass on these price increases to their customers.
Although both companies were still awaiting a verdict from the Department of Justice at the time of GE's withdrawal, GE took the opportunity to back out of the proposed merger over a year after its initial announcement. Going forward, GE stands to collect $175 million in compensation from Electrolux AB as per the conditions of their agreement.
GE has not offered a reason for its withdrawal from the proposed merger. However, the company has stated that it will continue to seek out opportunities to sell its perennial appliance division, which introduced the world to the toaster oven, the washing machine, the clothes dryer, and a range of other household appliances. GE is seeking to part with this division in order to concentrate on its core financial and industrial divisions, which make up the vast majority of its brand value.
This merger was first proposed in September 2014, and the Department of Justice filed its lawsuits against the companies in July 2015. The lawsuit's ultimate goal was to stop the merger and to preserve the close competition between these two brands, and both brands were in talks with the Department to find mutually agreeable conditions for the merger. Had it succeeded, this merger would have been the largest in Electrolux's long history. The company will continue to seek ways to spread its reach in the international household appliance market.
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