Sweden's Electrolux says it will buy General Electric Co's appliances business for $3.3 billion in cash to double sales in North America. As Joanna Partridge reports, the Swedish firm hopes to take on rival Whirlpool Corp with its biggest ever deal.
Sweeping up the competition? Sweden's Electrolux is buying General Electric's appliances business for $3.3 billion in cash. The world's second-biggest home appliance maker wants to double sales in North America. Electrolux sells under its own name and brands like AEG and Zanussi. It's strongest in Europe but has lacked scale in North America - a market that's growing significantly faster than its home region. The deal will see Electrolux take on its bigger rival Whirlpool in its home market. Quentin Webb is from Reuters Breakingviews. SOUNDBITE: Quentin Webb, Reuters Breakingviews, saying (English): "A bit like the autos industry, they're big ticket items which people don't make very often, so they're quite geared to economic cycles. There's a lot of spending on steel and other raw material costs and you have these low cost or ambitious players from Asia coming in and eating your lunch." Electrolux investors welcomed the tie-up, which saw the shares briefly hit a record high. The firm said it would finance the deal with a bridge facility and would carry out a rights issues once the acquisition's completed. But challenges remain. SOUNDBITE: Quentin Webb, Reuters Breakingviews, saying (English): "The aim is also to fend off the South Koreans, so both Samsung and LG are grabbing market share from the established players very quickly. Samsung has the ambition to be the world no. 1." The deal is expected to bring Electrolux annual cost savings of around $300 million.