Amid concerns from regulators, GE announced Monday that it has pulled its $3.3 billion sale of its home appliance business to Swedish-based appliance company Electrolux. Connecticut-based General Electric Co., offered no reason for its decision, but said in in the statement that it will continue to run the business per usual as it looks for other options to sell it, according to the Associated Press.
The acquisition, announced on Sept. 8, 2014, caused the U.S. Department of Justice to sue both companies on July 1, 2015, arguing that the combined company would dominate sales of cooking appliances, particularly to customers like home builders, property managers, hotels and governments.
These concerns were downplayed by Electrolux's antitrust attorney who said that Asian brands like Samsung and LG have increased their share of the large appliance market over the past decade, and noted that in 2006 U.S. regulators had already approved a similar deal between Whirlpool and Maytag.
In the meantime, Electrolux worked feverishly to obtain regulatory approvals, and said Monday it "regrets that GE has terminated the agreement while the court procedure is still pending." The DOJ had rejected the settlement proposals that Electrolux said were reasonable and would have addressed competition concerns, according to InvestorGuide.
"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," said Keith McLoughlin, President and CEO of Electrolux.
"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," he continued. "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."
As part of the annulment, Electrolux will have to pay GE a termination fee of $175 million, which GE has requested a pay-out for, according to Business Wire.
The values of both companies shares' fell once the announcement was made. GE fell 9 cents to $30.40 in premarket trading Monday, while Electrolux plummeted 11 percent in afternoon trading.
