GE has scrapped a $3.3 billion plan to sell its home appliance business to the Swedish company Electrolux, a deal opposed by U.S. regulators over concerns about competition.
The Fairfield, Connecticut, conglomerate said that it will continue to run the business as it looks for other options to sell it.
General Electric Co. offered no reason for its decision in a brief statement released Monday.
Electrolux is the world's second-biggest home appliance maker after U.S. rival Whirlpool. It sells most of its products in the U.S. under the Frigidaire brand.
The U.S. Department of Justice had sued to stop the deal in July, saying the deal would have eliminated a major competitor and left Electrolux and Whirlpool as the only big companies in the U.S. selling cooking appliances such as ovens and ranges.
David Gelfand, deputy assistant attorney general at the Justice Department's antitrust division, said in a conference call Monday that had the deal gone through, Electrolux would have manufactured more than 70 per cent of affordable ranges sold in the U.S., leading to higher prices for consumers.
Electrolux said Monday that it “regrets that GE has terminated the agreement while the court procedure is still pending.''
The Swedish company said settlement proposals that it considered to be reasonable were offered to federal regulators and would have addressed concerns about competition, but the Justice Department rejected those proposals.
An antitrust attorney representing Electrolux downplayed competitive concerns by noting that Asian brands like Samsung and LG have rapidly increased their share of the large appliance market over the past decade. The attorney also said huge retailers like Home Depot and major home builders can pressure manufacturers to keep prices low and competition intense.
GE has been selling parts of its portfolio as it pushes to focus more on core industrial businesses that make large, complicated equipment for other companies.
GE “couldn't get around'' the antitrust issues in the Electrolux deal, said Nick Heymann, an analyst at William Blair and Co., but its home appliance business is doing well and Samsung or LG could be prospective buyers.
The scrapped deal is a “minor roadblock'' in GE's business shift, and the unit will eventually be sold, said Jeff Windau, an analyst at Edward Jones.
GE said Monday it was entitled to a breakup fee of $175 million from Electrolux.
GE shares fell 12 cents to close at $30.37 Monday, while Electrolux AB Class B shares dropped more than 13 per cent in Stockholm.