A Fortune 500 company with a major presence in the Louisville region has been acquired by a global manufacturer for $3.3 billion. General Electric (NYSE: GE) has sold its appliances business to Electrolux. GE employs more than 6,000 workers at its division headquarters in the Kentucky city. September 8, 2014
FAIRFIELD, Conn. – GE [NYSE: GE] announced today it has signed a definitive agreement to sell its Appliances business to Electrolux for $3.3 billion. As part of the transaction, GE has entered into a long-term agreement with Electrolux to continue use of the GE Appliances brand. The transaction has been approved by the boards of directors of GE and Electrolux and remains subject to customary closing conditions and regulatory approvals, and is targeted to close in 2015.
"This transaction is consistent with our strategy to be the world’s best infrastructure and technology company," said GE Chairman and CEO Jeff Immelt. "We are creating a new type of industrial company, one with a balanced, competitively positioned portfolio of infrastructure businesses with strong advantages in technology, growth markets, driving customer outcomes, and a culture of simplification."
GE has taken significant steps in 2014 to reshape and focus its portfolio. In June, GE’s offer for Alstom’s Power and Grid businesses was accepted by the Alstom board and recommended by the French government. Power & Water is one of GE’s higher growth and margin industrial segments and is core to the future of GE. In August, GE completed the IPO of its North American Retail Finance business, Synchrony Financial, the first step in a planned, staged exit from that business.
The 2014 portfolio activity continues the Company’s longer-term redeployment of capital from non-core assets like media, plastics and insurance to higher-growth, higher-margin businesses in Oil & Gas, Power, Aviation and Healthcare. These moves support the Company’s portfolio strategy to achieve 75 percent of earnings from its Industrial business by 2016, and along with today’s announcement, highlight GE’s focus on core infrastructure businesses supported by a valuable specialty finance business.
"GE Appliances is a great business and we are proud of the role it has played in GE’s history," Immelt continued. "Electrolux is the right global business for our customers, consumers and employees. We have greatly strengthened this franchise in the past few years. 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. Like GE Appliances, Electrolux has a nearly 100-year history in home appliances and they share the same principles of quality, innovation and customer value as GE. They are committed to supporting the growth of GE Appliances and value the GE Appliances team and its capabilities."
"GE Appliances is a well-run operation with strong capabilities in key areas such as R&D, engineering, supply chain and customer service," said Keith McLoughlin, President and CEO of Electrolux. "We look forward to joining forces with their team of talented and competent people."
The transaction values GE Appliances at 8.0 times the last 12 months of earnings before interest, taxes, depreciation, and amortization. The sale will generate an approximate after-tax gain of $0.05-$0.07 per share at closing.
Goldman Sachs provided financial advice to GE, and Sidley Austin LLP was GE’s legal advisor.
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Source: General Electric