AB Electrolux of Sweden, the parent company of the U.S.
brands Electrolux and Frigidaire, has purchased GE Appliances for $3.3 billion.
The combined company is expected to have total sales of almost $23 billion and
will put the Frigidaire, GE and Electrolux brands under the same ownership. The
deal is expected to pass regulatory approval, and the acquisition will likely
be finalized in 2015. Likely, they'll all be impacted in some way by an
acquisition, as both companies have their own headquarters and factories. But
that's also exactly why the acquisition took place.
A combined GE and Electrolux would probably shed factories —
and jobs — similarly, according to sources within the appliance industry. For
instance, GE and Electrolux both unveiled new oven plants within the past year
— GE revamped its factory in LaFayette, Ga., and Electrolux opened a new
factory in Memphis. Similarly, GE introduced a new dishwasher platform at its
storied Appliance Park factory outside of Louisville, while Electrolux recently
started importing an all-new dishwasher design from Solaro, Italy.
The deal is not without precedent: When Whirlpool acquired
Maytag back in 2005, it led to the closure of redundant factories and Maytag's
Newton, Iowa, headquarters. Layoffs occurred across the company.
However, while the sale of Maytag took place amid lagging
sales, GE is a more attractive prospect. The sale is largely taking place
because of GE's renewed focus on its core infrastructure business, which has
already led to the spinoffs of nearly all the conglomerate's consumer-facing
businesses — including NBC television and banking businesses.
GE's loss is Electrolux's gain, as GE recently invested $1
billion into more than 500 new products, six factory upgrades and $20 million
in upgraded R&D labs. The combined company is expected to save $300 million
by combining sourcing, operations, logistics and brands. Eventually, consumers
may see less product differentiation in stores if a single company is
responsible for developing, manufacturing and marketing multiple brands.
The acquisition also gives Electrolux increased access to
the valuable builder's market that GE currently dominates. Additionally, the
sale includes access to GE's 48.4% ownership stake in Mabe, an appliance
company in Mexico. That gives Electrolux a valuable partner in the Latin
American market, where its sales have been dropping.
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