Published on September 8th, 2014 | by The GC Team0
Electrolux acquires GE Appliances for $3.3 billion
Electrolux today announced it has entered into an agreement to acquire GE Appliances, the appliance business of US manufacturer General Electric, for a cash consideration of US$ 3.3 billion.
The acquisition enhances Electrolux’s position as a global player in home appliances.
“This is an historic moment and important strategic move for the Electrolux Group, which takes our company to a new level in terms of global reach and market coverage,” said Keith McLoughlin, President and CEO of Electrolux (pictured).
“GE’s premium, high-quality appliances complement our own iconic brands and will enhance our presence in North America. The acquisition, which is our largest ever, strengthens our commitment to the appliance business and also provides Electrolux with the scale and opportunity to accelerate our investments in innovation and global growth.”
GE Appliances generates more than 90% of its revenue in North America. Its product portfolio includes refrigerators, freezers, cooking products, dishwashers, washers, dryers, air conditioners, water filtration systems and water heaters. Its revenue split by major product category is approximately 35% cooking, 25% refrigeration, 20% laundry, 10% dishwashers and 10% home comfort (A/C). The company operates its own distribution and logistics network and has nine well-invested manufacturing facilities with 12,000 employees.
Jeff Immelt, Chairman and CEO of GE, said: “Electrolux is the right global business for our customers, consumers and employees. GE Appliances’ people, valuable home appliances brand, products, distribution, and service capabilities make it a perfect fit with Electrolux and its goal of accelerating growth in the US.”
The acquisition includes a 48.4% shareholding in the Mexican appliance company Mabe, which GE Appliances has had a joint venture with for nearly 30 years. Mabe develops and manufactures portions of GE Appliances’ product offering.
In 2013, GE Appliances had sales of US$ 5.7 billion and an EBITDA of US$ 390 million including its share of income from Mabe.
“GE Appliances is a well-run operation with strong capabilities in key areas such as R&D, engineering, supply chain and customer service, and we look forward to joining forces with their team of talented and competent people,” said Keith McLoughlin.
The transaction is expected to generate annual cost synergies of approximately US$ 300 million. One-off implementation costs and capital expenditures are estimated to be US$ 300 million and US$ 50‑70 million respectively. The largest parts of the synergies are expected in sourcing, operations, logistics and brands.
The proforma combined 2013 sales figure for Electrolux and GE Appliances is US$ 22.5 billion and EBITDA US$ 1.5 billion. Electrolux and GE Appliances together have 73,000 employees.
Completion of the transaction is mainly subject to regulatory approvals. The acquisition is expected to close during 2015.