Electrolux Buys GE's Appliances Business For $3.3 Billion

Deluxe Deal: Sweden's Electrolux Buys GE's Appliances Business For $3.3 Billion

Swedish firm Electrolux AB has indicated that it is set to double sales in the US through a buyout of around $3.3 billion for the appliances business of General Electric Co. This is the largest ever deal for the Swedish firm which is now expected to charge ahead of rival Whirpool with this latest acquisition.

The household appliance business at GE is around 100 years old according to a Reuters report. The vast amount of revenue this unit generates is nothing new either. This unit earned revenues of around $5.7 billion last year. Considering that the price of the buyout is lesser than this, The Swedish firm seems to have made a winning deal.

Electrolux is also hoping to expand beyond European frontiers through this deal. Growth in North America is the intended aim of the deal, according to analysts at Reuters. Whirlpool is definitely the larger rival. But whether the vortex will swallow Electrolux now becomes debatable following this acquisition.

Electrolux is the second largest appliance maker by sales in the world, according to media reports. It will now see its sales in the US double to over $10 billion, a move that could leave it neck to neck with Whirpool for the numero uno position. Numbers mean a lot in the corporate world and judging by the king size profits involved here, the Swedish firm has made a queenly deal that will leave it with princely returns. Electrolux's shares rose by many Swedish crowns following the announcement of the deal.

Perhaps what is considered the biggest gain from the deal is that the iconic GE Appliance brands are set to be retained by the firm. Electrolux will therefore not have to work that hard to establish a customer connect. The best part about acquisitions is that customers can latch on to the known brand as usual rather than being faced with the unfamiliarity of newly established brands. This has a vast role to play in the process of retaining record sales or attaining new highs.

The GE appliances business currently sells AC, water heaters, stoves and refrigerators under the ever popular GE brands namely Hotpoint, GE Cafe and GE Monogram. Reuters has pitched it strong for the Swedish firm to have made massive gains through this deal. It has even quoted the Chief Executive at Electrolux, Keith McLoughlin as saying "I think it's a historic event for Electrolux. I'm very excited about it. I think the fit - the strategic fit, the industrial logic - is compelling.”

Apart from this, the deal also includes GE's 48.4% stake in Mexico's appliance maker Mabe. Reuters has been closely following the deal and it seems to be indicating that the Swedish firm is in for a treat where “the sky's the limit.” Whether the deal turns out to be as sweet for the European firm is now dependant on its capacity to outwit and more importantly outsell its rival. Whether the pit is nearing for Whirlpool still remains a question, given its gigantic size and the fact that this firm is an immense force to contend with.