The family office behind Swedish banking dynasty, the Wallenbergs, has given their stamp of approval on a recent deal by publicly-listed Electrolux, in which they are the largest shareholder, to buy General Electric’s US appliance business for $3.3 billion (€2.5 billion).
In a statement, the Wallenberg family office, Investor, which holds 15.5% of the capital and 30% of voting shares in Electrolux, said it fully supports the transaction and is looking forward to seeing the brand increase its foothold in North America.
The deal, which is the largest in the company’s 100-year history, will help Electrolux take on US market leader Whirlpool, which controls 40% of the North American market and had revenues of $18.8 billion in 2013.
Electrolux, who specialise in refrigerators, air conditioners, and washing machines, say the acquisition will allow the Swedish company to compete on equal footing with Whirlpool, who recently acquired 60% of Italian home appliance maker Indesit for $1 billion.
Electrolux and General Electric had combined revenues of $22.5 billion last year and they believe appliance sales could account for up to 47% of the company’s revenue in 2014.
“As the leading owner, with a long-term ownership horizon, we find Electrolux’s acquisition of GE Appliances industrially attractive and fully support it. The acquisition will strengthen Electrolux’s position significantly in the important US market and allow for continued investments in innovation and growth”, said Investor chief executive Börje Ekholm.
Investor owns significant shares in a range of top tier companies, including industrial group Atlas Copco and communication firm Ericsson.
The deal will give Electrolux larger purchasing power when negotiating with suppliers and the firm estimates that they could save up to $300 million per year.
Shares in Electrolux rose 5.1% after news of the acquisition broke and the deal is expected to close in 2015. The deal also includes a termination fee of $175 million which will compensate General Electric in the event that the Swedish firm fails to gain regulatory approval.
The transaction includes a 48.8% share in Mexican appliance maker, Mabe, who have been part of a joint venture with General Electric for 30 years.
Electrolux was founded in Stockholm in 1910 and traded mainly in vacuum cleaners. In 1956, Investor purchased their stake in Electrolux.