Electrolux AB agreed to buy General Electric Co’s (GE) home appliances unit for US$3.3 billion in cash, adding brands such as Hotpoint and GE Monogram with its biggest acquisition.
The Swedish company plans a rights offering to fund about 25 percent of the purchase, it said yesterday in a statement, adding that the deal would be accretive to earnings per share starting in the first year.
Electrolux is to continue using the GE Appliances brand under a “multi-decade agreement,” GE spokesman Seth Martin said.
The acquisition is expected to boost Electrolux’s presence in the US, its largest market, as the Stockholm-based company tries to reverse several years of stagnant sales. Both Electrolux and GE trail Whirlpool Corp, the largest US appliance company.
The purchase “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,” Electrolux chief executive Keith McLoughlin said in the statement.
The appliances unit helped make GE a household name with US consumers after introducing its first toaster in 1905. The sale, which follows an unsuccessful attempt to divest the business in 2008, furthers GE chief executive Jeffrey Immelt’s effort to reshape the company around its high-margin industrial units.
“This transaction is consistent with our strategy to be the world’s best infrastructure and technology company,” Immelt said in the statement. “We are creating a new type of industrial company, one with a balanced, competitively positioned portfolio of infrastructure businesses with strong advantages in technology, growth markets, driving customer outcomes and a culture of simplification.”
The deal is expected to generate an aftertax gain of US$0.05 to US$0.07 per share at closing, according to GE, which has invested US$1 billion in the Louisville, Kentucky-based appliances division since the global financial crisis.
The unit, which employs about 12,000 people, had sales of US$5.7 billion last year, or 4 percent of GE’s total revenue, the company said. About half of the employees work at the 364-hectare headquarters campus, known as Appliance Park.
Electrolux, the maker of Frigidaire refrigerators and AEG stoves, said the deal would enhance its presence in North America, where the asset generates more than 90 percent of revenue, and generate savings in both sourcing and operations.
Electrolux, which has its North American headquarters in Charlotte, North Carolina, generated sales of 31.9 billion kronor (US$4.5 billion) across the continent last year, almost 30 percent of its global revenue. ]
The company said in July that it expects US sales to grow 4 percent this year.
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