electrolux, ge deal marks increased consolidation - home appliance manufacturer
Electrolux's acquisition of GE's home appliance division marks a major shift in the US home appliance market to consolidationS. and worldwide.
The deal ended this morning at $3. 3 billion —
$0. 8 billion more than originally expected
It is expected to be approved by the regulatory authorities.
In addition to potential redundancies, it may also have a chain reaction across the home appliance industry as Electrolux uses the GE brand to support its products and access to new markets and sales channels.
Electrolux and General Electric are currently the second and third largest electrical manufacturers in the United States. S.
Even if combined, they may be smaller than Whirlpool, the industry leader, who still faces fast-
Samsung and LG brands are growing in Korea.
In a dynamic global market, however, a single entity is better suited to compete with competitors.
Keith McLoughlin, president and CEO of Electrolux, said at a press conference this morning: "The home appliance industry is a large, growing global business with no excessive capital density.
However, the competition is fierce.
"The combined company uses three wells
Well-known brands: Electrolux, FRIGIDA, General Electric.
At this morning's press conference, McLoughlin highlighted the advantages of each brand --
Including GE is the most powerful home appliance brand considered by consumers.
Dinesh Kithany, senior analyst at IHS appliances, said Electrolux will be key to maintaining GE Appliance's most well-known brand value.
"The most important factor in this transaction is how to sign a license agreement because they are very picky about the brand, the company, the employees, and the consumers, knowing GE. "He said.
Electrolux will of course retain the brand itself and reposition itself in its own brand.
"There is now a good mix of architecture and brands that will allow us to serve the entire market," McLoughlin told the review . ".
In an interview
Although the global home appliance market is growingup 4.
Markets continue to recover at different rates from the global financial crisis.
This means that it is becoming more and more difficult for manufacturers to compete in a single geographic location.
Kithany says it makes sense for manufacturers to integrate to cope with market volatility.
Including 48 of it.
Mabe, a Mexican appliance maker with a 8% stake, also has a strong presence in Canada, and GE electric currently has few operations outside North America.
This connects the company's wealth to the consumer needs of the single continent.
Electrolux has diversified operations worldwide and is growing in Europe and South America.
Similar to Whirlpool's strategy, Whirlpool recently acquired Indesit, making it more influential in Europe.
The acquisition of GE will help Electrolux further diversify in the United States. S.
Just as Electrolux is as big around the world, there is just as much overlap between the two companies --
Including manufacturing and product development
GE dominates several key areas of Electrolux's struggle.
For example, high
The most efficient laundry room is where the Frigidaire brand has the least presence and Electrolux is completely uncompetitive.
McLaughlin highlighted the category at a press conference, as well as GE's advantages in high-end independence and architecture --
In terms of refrigeration
In addition, GE is a major player in the US market. S. builder market.
As housing began to increase, sales of construction appliances began to increase.
GE also has a lot of sales space in Home Depot to sell its products, and Electrolux sells a lot less products there.
Electrolux is really in-for sale-
Sear's decline in sales has made trading with other retailers more attractive.
GE and Electrolux are also competing on a large part of the culinary equipment market, but Kithany thinks it's not a problem.
In fact, the two companies also seem to be a strategic fit in terms of products.
"I think there may be good synergies in this case.
"I want to say that large cooking equipment has grown in the home appliance market," he said . ".
The capacity of GE will help Electrolux.
"In fact, at this morning's press conference, Electrolux highlighted how the two companies complement each other and seemed to position GE as a medium-sized companytier to mass-premium brand —
Above fridges, below Electrolux.
There is room for all three brands on the market, as long as the three brands are positioned separately and properly marketed to consumers.
In addition, Electrolux has benefited from GE's recent $1 billion investment in its products, factories and research and development.
GE also has a strong presence in logistics and services, which will help simplify operations for both companies.
It is expected that the combined companies will save $0. 3 billion a year by integrating procurement, logistics and brands.