General Electric (GE) has pulled out of a deal to sell its appliance business to Electrolux AB for $3.3bn, causing the Swedish manufacturer’s shares to plummet.
It comes after the US Department of Justice opposed the deal on antitrust grounds. It argued that the deal would reduce competition for kitchen appliances, resulting in customers paying 5% more for wall ovens and ranges (1).
Shares in Electrolux have fallen by more than 10% as a result – the biggest drop in more than four years.
Electrolux has fought back, claiming that similar deals in 2006 between Whirlpool and Maytag had been approved by the US authorities, and higher prices had not been triggered.
“Electrolux can no longer pursue what would have been the largest transaction in its history – a significant loss for the company,” wrote DNB Bank ASA analysts on Monday (2).
The Swedish company will now have to pay GE a termination fee of $175m (1).
“We’re disappointed and regret GE has taken this decision,” Electrolux CEO Keith McLoughlin said. “Both companies have worked hard to get this done. We both knew this would be a difficult case. Disappointed, but certainly not defeated” (1).