Electrolux slides as US files lawsuit to stop GE deal

Shares in Electrolux slid 10% on Thursday after US antitrust officials filed a lawsuit to block the sale of General Electric’s appliance business to the Swedish company, saying the $3.3bn deal would lead to higher prices for US consumers.

Electrolux had agreed to buy the business last year in an effort to boost its presence in the US and reduce dependency on Europe.

Deputy assistant attorney general Leslie C. Overton of the Justice Department’s antitrust division, said: “Electrolux’s proposed acquisition of General Electric’s appliance business would leave millions of Americans vulnerable to price increases for ranges, cooktops and wall ovens, products that serve an important role in family life and represent large purchases for many households.”

He said the lawsuit seeks to prevent a duopoly in the sale of these major cooking appliances to builders and other commercial purchasers, who often pass on price increases to home buyers or renters.

GE said in a statement: “Electrolux and GE intend to vigorously defend the proposed acquisition as pro-competitive and pro-consumer. Our goal remains to close the deal this year. GE continues to believe that GE Appliances’ customers, consumers and employees will benefit from Electrolux’s commitment to the appliance business and its ability to compete with global competitors."

RBC Capital Markets said: “Whilst the DoJ may not be successful, the deal break risk has clearly increased materially.”

RBC estimates that a combined Electrolux/GE would have a 25-30% market share in core appliances in North America, however market share in the cooking sector would likely be above this.

“Sales to builders are a relatively small part of the overall market, and we’d argue don’t need the protection afforded to sales to consumers,” it said.