After the initial proposal of Electrolux AB (ADR) (OTCMKTS:ELUXY) to acquire General Electric Company (NYSE:GE)’s appliances division for $2.5 billion, the deal is finally over with a price tag of $3.3 billion.
This is the biggest acquisition for Electrolux AB (ADR) (OTCMKTS:ELUXY) and Keith McLoughlin, CEO of Electrolux, said,
“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.”
Electrolux AB (ADR) (OTCMKTS:ELUXY) is the second largest home appliance maker and the addition of General Electric Company (NYSE:GE)’s appliances division will certainly help the company in its expansion plans in North America. CEO of General Electric Company (NYSE:GE), Jeff Immelt, was happy with the deal and 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 U.S.”
McLoughlin further added that the combined company would generate sales worth $23 billion and the acquisition process will be over by 2015. In addition to it, this is a valuable merger as both the combined company would be able to lower its operating costs, save on additional stores, and there are possible chances of workforce layoff. It is expected that the merged company would be able to trim down its costs by $300 million simply with the combination of its brands, logistics, operations, and sourcing.
One of the best factors is that the merger is happening because of General Electric Company (NYSE:GE)’s focus on its core infrastructure business rather than out of losses. Immelt added,
“GE Appliances is a great business and we are proud of the role it has played in GE’s history.”
This merger is supposed to help both the companies in their future prospects and healthy growth.
This article has been written by Prakash Pandey.