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GE selling assets to Electrolux

Texas consumers may have heard the recent announcement by Electrolux that it was going to be purchasing General Electric's appliances division for $3.3 billion. The goal of the cash purchase is to double sales in North America and better compete with rival Whirlpool. Electrolux released a statement saying GE's products were a compliment to its own iconic brand. The statement also said that the purchase allows the company the scale needed to innovate and grow.

Electrolux has several well-known brands on the market including Frigidaire, AEG and Zanussi. Before this recent planned acquisition, Electrolux was the second-largest home appliance maker behind Whirlpool and is most successful in Europe where it saw 28 percent of its sales in 2013. Sales are expected to grow in North America from $4.5 billion in 2013 to $9 billion after the acquisition. Organic growth in 2013 was less than one percent in Europe compared to 7 percent in North America.

The company estimates that it would save about $300 million per year. The sale is being financed by a bridge loan facility that would be taken out by an equity offering. GE's appliance business had earnings of $390 million in 2013 after interest, tax, depreciation and amortization were taken into consideration.

Acquiring another company may help a business meet its overall strategic goals. Buying another business may allow both companies to save money and help the new combined company scale its operations. This may result in lower prices for customers and better products as well. Any company that is considering an acquisition may wish to consult with a business law attorney who can assist in the preparation of transactional documents and advise whether any regulatory approvals will be required.

Source: The Huffington Post, "Electrolux Plans To Buy General Electric's Appliances Business For $3.3 Billion", September 08, 2014

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