Electrolux’s proposed $3.3 billion acquisition of GE’s appliance business faces a critical roadblock, with the Department of Justice (DOJ) digging its antitrust heels in even deeper as the two sides meet in court.
According to Electrolux attorney Joe Sims, DOJ now wants Electrolux to divest its entire U.S. business before the deal can go through, Bloomberg News reported. As a result, any chance of a negotiated settlement is unlikely, Sims told Reuters.
Instead, the manufacturer met the regulators in a federal district court in Washington last week to fight an agency antitrust suit. The suit contends that the acquisition would create a commercial and cooking appliance duopoly given GE’s strength in the homebuilders’ channel and both vendors’ significant market share in ovens.
In his opening statement, DOJ attorney Ethan Glass claimed that the merged majap maker would control two out of every three ranges sold in the U.S., resulting in a possible 5 percent price increase, and that together with Whirlpool it would make nearly 90 percent of the ranges sold in the country, the Wall Street Journal reported.
What’s more, Glass accused Whirlpool of actively supporting the deal in an “unprecedented” effort that would quash competition.
The impasse dashes Electrolux president/CEO Keith McLoughlin’s hopes for “a reasonable settlement,” which he expressed with the company’s third-quarter earnings release last month.
Instead, senior VP Frank Wagner reiterated the company’s contention to Bloomberg that DOJ has an “incomplete understanding of how appliances are manufactured and sold” in the U.S., given the aggressive inroads by Asian manufacturers LG, Samsung, Haier and Arcelik/Blomberg.
Handelsbanken analyst Karri Rinta told Bloomberg that short of selling factories, the only way to possibly satisfy the regulators would be to jettison brands like GE’s opening-price-point Hotpoint nameplate or its premium Monogram marque.
- 2019 TWICE Top 100: Watch List - May 23, 2019
- 2019 TWICE Top 100: Consumer-Direct Sales Dominate The Charts - May 22, 2019
- 2019 TWICE Top 100: Best Buy Keeps The CE Crown, But Barely - May 21, 2019