GE has been defending the planned sale in the US Federal Court since early November after the Justice Department sued in July this year to block the transaction, alleging that the deal would reduce choice and drive up prices for consumers. Had the deal gone through, Electrolux would have controlled 40 per cent of the US appliance market. However, with legal proceedings winding down and the court's verdict on the sale still pending, GE has made the unusual decision to throw out the deal. GE and Electrolux faced a significant setback during the trial when Electrolux chief executive Keith McLoughlin sought to retract and correct inaccurate testimony he realised he had given about prices charged by Samsung and LG for ranges.
Reasons Unconfirmed
When deals of this nature face regulatory pressure, companies generally opt out long before the legal costs associated with going to trial begin to pile up. Thus, with the trial largely concluded, the Justice Department was until Monday morning working on the assumption that the case would go to a decision. However, GE has now announced that it is pulling the plug on the deal, leaving many speculating as to the reasons behind the unusual decision. While GE lawyers have as yet declined to comment on the move, one lawyer said anonymously that the company may have sacked the deal in order to pursue other avenues as soon as possible, rather than await an expected unfavourable verdict. A statement from GE confirmed that the company would 'pursue other options' for its appliance business. Public Citizen Legislation Group attorney Scott Nelson has also speculated that a $175 million break-up fee required under the sale agreement may have been a deterrent to pursuing the deal. Sources: The National Law Journal; BBC
Email your news and story ideas to: [email protected]
