General Electric Co (GE) has abandoned plans to sell its appliance business to Electrolux AB of Sweden for about US$3.3 billion amid a trial in a US federal court in Washington over the deal after it failed to gain approval from competition regulators.
GE is entitled to a breakup fee of US$175 million, the Fairfield, Connecticut-based company said in a statement. Electrolux said separately that it regrets GE’s move as it had proposed “reasonable” measures to the US Department of Justice that should have got the deal through.
Both companies were being sued by the department to stop the proposed transaction.
Electrolux needed the GE deal to gain scale in the key US market after acquiring the iconic Frigidaire brand. It fought the Department of Justice’s claim that the combined company, along with Whirlpool Corp, would dominate the US cooking-appliance market, leading to a duopoly that would have the market power to dictate prices for consumers and homebuilders.
The deal was first announced in September last year.
“Although we are disappointed that the acquisition will not be completed, Electrolux is confident that the group has strong capabilities to continue to grow and develop its position as a global appliances manufacturer,” Electrolux chief executive Keith McLoughlin said in a statement.
GE said it would seek an alternative buyer for the appliance division, which is “performing well.”
For Electrolux, costs of 402 million kronor (US$47 million) tied to the deal have been incurred in the first nine months of the year, the company’s statement said.
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