General Electric scuttles sale of appliance unit to Electrolux; renewed uncertainty for Louisville
The U.S. Department of Justice asked a federal judge to block the deal in July on anti-trust grounds.
LOUISVILLE, Ky. (WDRB) --- General Electric has scuttled the proposed sale of its Louisville-based appliance division to Electrolux, renewing uncertainty about the future of about 6,000 well-paying local jobs.
GE said Monday that it intends to find another buyer for the appliance business, which the company has been trying to sell -- off and on -- since 2008.
"We are not out of the woods. The appliance business is still up for sale," said Dana Crittendon, president of IUE-CWA Local 83-761, which represents about 3,800 production workers at Appliance Park in Louisville. "...It's a tough situation because there is no stability here."
To Electrolux's dismay, GE exercised its option to pull out of the deal. The two companies were about month into a trial in federal court in Washington, D.C., in which they had been trying to a convince a judge to allow the $3.3 billion sale to go through.
The U.S. Justice Department sued to block the deal in July, arguing the combined company would have too much power in the market for cooking appliances.
A ruling by U.S. District Judge Emmet Sullivan had been expected this month or next, but now the case is moot.
GE said in a press release that it will "pursue other options" to sell the Louisville-based appliance division that makes products such as washing machines, refrigerators and water heaters. GE added that it's entitled to a $175 million "break-up fee" from Electrolux.
Electrolux said it "regrets that GE has terminated the agreement while the court procedure is still pending."
The deal, announced in September 2014, would have had big implications for Louisville's economy. About 3,800 hourly employees work at GE's massive Appliance Park factory, while about 2,200 salaried workers oversee the park and the division's other corporate responsibilities.
Electrolux had promised investors that it would generate $350 million a year in "synergies" from combining the two operations, partly through cost-cutting.
One big question was how many white-collar jobs in areas such research and development, accounting and marketing would have been consolidated into Electrolux's North American headquarters in Charlotte.
"As GE explores new opportunities, the city of Louisville will do its part to help grow the workforce and maintain the GE Appliances headquarters here,” Louisville Mayor Greg Fischer said in a statement Monday.
"I have immense confidence that the team will continue to innovate, produce, and sell at the world class levels under the iconic GE brand," Fischer said.
Kim Freeman, a spokeswoman for GE's appliance division, said that despite the uncertainty, the business is in much better shape than in 2008 -- the first time GE openly tried to find a buyer.
GE has poured about $1 billion into Louisville Appliance Park in the last five years, adding about 3,000 jobs and launching new products like bottom-freezer refrigerators and hybrid-electric water heaters, Freeman said.
"We are reaping the rewards of that," Freeman said, adding that the appliance division is on track to bring in the most revenue since 2007. (GE Appliances generated $5.7 billion in revenue in 2013, according to Electrolux presentation when the sale was announced).
Kent Oyler, president and CEO of Greater Louisville Inc., the metro chamber of commerce, said he was disappointed to see the Electrolux deal fall through. Electrolux had said it was going to invest in and grow GE's appliance division, though there were few specifics.
But Oyler said there's reason for optimism given the appliance division's turnaround.
"GE is currently on fire right now. They have had five straight quarters of growth. They’ve got a lot of new product introductions. So, GE appliance group is still pretty strong," he said.
GE Appliances CEO Chip Blankenship declined to speak with WDRB on Monday following a meeting with Crittendon at the IUE-CWA union hall on Poplar Level Road.
Following the meeting, Crittendon said "the message from GE" is that a new buyer could emerge as soon as 2016.
"There was several other buyers approaching GE even with the sale to Electrolux...It could happen in 2016; it just depends on the arrangements and the deal," Crittendon said.
"For right now, we have to approach it as, 'we still have our jobs,'" Crittendon said. "We just have to continue to build a good product, to show up for work everyday."
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