General Electric Company (NYSE:GE) has agreed to sell its home appliance division to Electrolux for $3.3 billion. As Electrolux CEO Keith McLoughlin discussed on CNBC this morning, the move is a necessary one for the Swedish appliances manufacturer, doubling their size in the competitive U.S market and making them a greater force globally, about 33% larger.
“The appliance business has become quite competitive and has in fact internationalized or globalized, and as is consolidated, you need to have large-scale, global competitiveness in order to compete. So I think the combination of GE’s appliance group with the Electrolux group is a significant opportunity for us to enhance our competitiveness globally,” McLoughlin said.
The General Electric Company (NYSE:GE) brand name will continue to be used by Electrolux for decades to come as part of the deal, giving them another major brand to go along with their Frigidaire refrigerators and AEG stoves.
For General Electric Company (NYSE:GE), the sale rids them of a division they were trying to divest themselves of since 2008 as they shift their focus to higher margin industrial units. Despite the global perception of General Electric Company (NYSE:GE) being a home appliances company, the division accounted for just 4% of General Electric Company (NYSE:GE)’s total revenue last fiscal year, with $5.7 billion in sales.
Other companies were rumored to be interested in purchasing General Electric Company (NYSE:GE)’s home appliances division, with GE reporting last month that they were in negotiations “with Electrolux and other interested parties”, as reported by Bloomberg. One of those rumored parties was New York-based startup Quirky, which GE had invested $30 million in last year, and which would have made a rather intriguing suitor given their small nature. While it was never officially announced that Quirky was involved, Bloomberg announced a couple of weeks later that they were no longer interested.
General Electric Company (NYSE:GE) shares are down 6.89% for the year and begin trading today at $26.10.