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New deal between GE and Electrolux

Investors in Maryland may be affected by the recent deal between Electrolux and General Electric that was announced on Sept. 8. The $3.3 billion acquisition of GE's appliance division will double the Swedish company's North American sales and allow it to be compete with its rival Whirlpool Corp. For Electrolux, the appeal to complete its largest acquisition to date was attributable to the opportunity to improve scale and to increase its North American market share, which was outpacing that in Europe.

According to Electrolux, the acquisition should help increase the rate of the organization's global growth. The company is the second-largest appliance seller in the world, trailing only Whirlpool. Electrolux has always had its largest market share in Europe. During 2013, North America accounted for 32 percent of group sales, while Western Europe accounted for 28 percent. Organic growth in European markets was around 0.4 percent, while growth in North America was around 7 percent.

The appliance division from GE will increase Electrolux's U.S. sales by more than two-fold, beyond the $4.5 billion recorded in 2013. GE's appliance division totaled $5.7 billion in sales during 2013, with 90 percent coming from North America. Electrolux anticipates a cost savings of about $300 million annually from the acquisition. The organization will use bridge financing for the transaction, to be taken out by future equity financing.

Business lawyers may help executives and management complete important transactions, while mitigating the potential for adverse effects in the future. Lawyers often serve to safeguard businesses by reviewing contracts and new agreements to ensure the appropriate protections are included in the new transaction. Legal counsel may also help large clients negotiate Business acquisitions, while anticipating regulatory requirements that may arise as a result.

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

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