Electrolux share price tumbles on $3.3bn General Electric appliances merger cancellation
Shares in Swedish appliance manufacturer Electrolux tumbled 14 per cent this morning, after it emerged the company won't buy General Electric's appliance business – thanks to interference from the US Department of Justice (DoJ).
In a sheepish update this morning, the company said it had been notified by GE that it had terminated the $3.3bn takeover agreement, originally made in September last year, thanks to a lawsuit filed by the DoJ in July.
The company added that GE had requested a termination fee of $175m (£116m). Ouch.
You can see why Electrolux was at pains to reassure investors: "Electrolux aims at growing its operations globally, both organically any through acquisitions, which is supported by a strong balance sheet and good cash generation," it said.
Keith McLoughlin, president and chief executive of Electrolux, added:
“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.
“The strategy to grow profitably in promising segments, product categories and emerging markets remains. The group’s operations in North America have proved to be strong on its own merits, with good organic growth and a recovery in earnings during 2015.
"Major appliances North America has a strong presence in the US under the brands Frigidaire and Electrolux, and we are confident that this position will be maintained and strengthened.”