Electrolux agreed to buy G.E. Electronics' appliance business for $3.3 billion in an attempt to widen their sales in North America and to compete with Whirlpool Corp in the U.S. market.
The Sweden-based multinational announced in August their plans to expand in markets where they have little sales. They are reportedly growing faster in the European market. Earlier this month, Reuters reported that Electrolux's biggest deal was near completion.
Keith McLoughlin, Electrolux's chief executive, said that the good part of the deal comes with G.E.'s strong hold in the home builders market in the U.S. The Swedish company, despite its $15.9 billion revenue in 2013, only has a small share in the market. McLoughlin also said that another advantage is that the company produces washing machines in the U.S. The Swedish company imports their machines from Mexico subjected to about 33% tax.
"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," said McLoughlin. The executive said that once the deal is completed, they expect the company's stocks to rise to about 37% from 20%.
Electrolux, with the slew of other brands under the company, is already one of the biggest appliance maker in the world, but only second to Whirlpool and with its largest market based in Europe.
McLoughlin said that with their newest acquisition, they'll soon be on par with Whirlpool in terms of global sales. It's estimated that G.E.'s Appliances can double Electrolux's hold on the market. Whirlpool declined to comment on the matter.
Electrolux plans to position G.E. as their mid-range products in between the mass-market-targeted Frigidaire and Electrolux's high-end models.
G.E. has been focusing their conglomerate business on industry-heavy services such as jet engines, power turbines, and oil-sector services. The company finds an exit from an industry that they've been eager to sell in recent years.
The companies are expected to close the deal early next year.
