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Electrolux settlement proposal for GE case rejected by U.S.

Electrolux CEO Keith McLoughlin said during last week’s quarterly earnings announcement that Electrolux was preparing to defend itself in court.
Electrolux CEO Keith McLoughlin said during last week’s quarterly earnings announcement that Electrolux was preparing to defend itself in court. dhinshaw@charlotteobserver.com

Electrolux AB plunged in U.S. trading after the Justice Department rejected a proposal to resolve a government lawsuit seeking to block the $3.3 billion takeover of General Electric Co.’s household-appliance business.

The Stockholm-based company’s offer to sell assets falls “well short” of replacing the competition that would be lost as a result of the deal, Ethan Glass, a lawyer for the department’s antitrust division, said at a hearing Friday in Washington federal court. Settlement discussions have ended, he said.

Electrolux’s North American headquarters are located in Charlotte, on David Taylor Drive in the University City area. The company employs about 900 people there. Chief Executive Officer Keith McLoughlin has said the headquarters will remain in Charlotte after the GE Appliances acquisition, but the company is evaluating whether to go forward with a planned expansion that would double the Charlotte headquarters’ size.

Electrolux’s American depositary receipts fell 6 percent after the breakdown in negotiations was announced.

The U.S. claims the tie-up threatens to raise prices for consumers. The government’s lawsuit against Electrolux and Fairfield, Connecticut-based GE to block the deal is set to go to trial on Nov. 9 before U.S. District Judge Emmet Sullivan, who encouraged the two sides to continue talking.

“We presented the DOJ with what we believed was a reasonable divestiture settlement package that addressed the government’s concerns,” Electrolux spokeswoman Eloise Hale said in a statement. “We strongly disagree with their assessment of the acquisition, and are confident in the merits of our case.”

If the Swedish company prevails, the GE deal would add a stable of brands such as Hotpoint to a lineup that already includes AEG stoves and Frigidaire refrigerators. Europe’s biggest appliances-maker targeted the acquisition to boost its standing in North America and put it on a par with market leader Whirlpool Corp.

McLoughlin said during last week’s quarterly earnings announcement that Electrolux was preparing to defend itself in court.

For GE, completing the sale would further its tilt toward manufacturing operations centered on heavy-duty machinery, including oilfield equipment and jet engines. CEO Jeffrey Immelt is shedding consumer-focused divisions and about $200 billion of financial businesses while bulking up the industrial units.

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