Electrolux shares plunge on termination of GE deal

The announcement comes amid an ongoing legal battle with the U.S. Justice Department to get the acquisition approved.

The unit, which has been on and off the selling block for almost a decade, “is performing well, and GE will continue to run the business while it pursues a sale”, the conglomerate said.

Under the transaction agreement, Electrolux is required to pay to GE a termination fee of United States dollars 175m under certain circumstances.

Electrolux has made extensive efforts to obtain regulatory approvals, and regrets that GE has terminated the agreement while the court procedure is still pending.

“I was surprised this deal was contested by the Justice Department, but then when we saw what their concern, which was the creation of duopoly in a part of the appliance market, it began not to look so good”, said Karri Rinta, an analyst with Handelsbanken Capital Markets.

The Wall Street Journal is reporting that General Electric has terminated the sale of it’s appliance business to Electrolux. Unfortunately, these proposals were rejected by DOJ.

Announcing the deal in autumn previous year, Electrolux said its biggest ever acquisition would double its sales in the United States and step up the challenge to arch rival Whirlpool in the world’s largest appliance market.

“We’re disappointed but we’re certainly not defeated”, Electrolux CEO Keith McLoughlin told a conference call.

For the period from January to September 2015, transaction costs related to the acquisition of 266 million kronor (29 million euros, $31 million) and cost for preparatory integration work of 136 million kronor have been charged, the company reported.

Electrolux, which makes Frigidaire, Kenmore and Tappan appliances, and the DOJ were arguing in court when GE pulled the plug, leaving the Swedish firm’s US strategy in tatters.

GE shares fell 9 cents to $30.40 in premarket trading Monday about an hour ahead of the US market open, while Electrolux shares dropped 11 percent in afternoon trading in Stockholm.

For Electrolux, costs of 402 million kronor (£31.4m) tied to the deal have been incurred in the first nine months of the year.