Chief Executive Officer Keith McLoughlin has indicated to Bloomberg that the $3.3 billion acquisition of General Electric’s appliance business may not be the end of the company’s spending as he steps up the battle with rival Whirlpool.
“This acquisition will actually give us more financial horsepower on our balance sheet to do even more around the world,” McLoughlin, who last announced a takeover in 2011, said in an interview with Bloomberg. “We can invest for growth, whether that is organic investment or acquisition investment.”
Today’s deal brings together brands such as Hotpoint and Frigidaire and will put Electrolux on a par with Whirlpool, both having annual revenue exceeding $20 billion. The two companies will dominate the North American appliance industry, controlling about 40% each, according to Kepler Cheuvreux analysts.
The appliance market will consolidate further, according to Mats Nystrom, an analyst at SEB in Stockholm. Today’s deal, which includes a 48.4 percent stake in Mexican appliance company Mabe, comes just two months after Benton Harbor, Michigan-based Whirlpool bought a controlling stake in Italian appliance maker Indesit Co. for 758 million euros ($981 million).
For Stockholm-based Electrolux, today’s acquisition is “not the end of the movie,” McLoughlin said. “We’re not changing the strategy around global growth.”
MvLoughlan has said he plans to strengthen the company’s position in its main markets of Europe and North America, while boosting its share of sales from emerging regions to at least 50 percent within five years. McLoughlin said in a June interview that about 36% of sales come from developing markets.
What we see, as margins get squeezed more and more as costs rise but retail prices are held artificially low, is less choice for consumers. As these mammoth companies are forced to effectively buy market share to maintain the enormous volumes required to keep the low prices, there is less and less choice available to consumers all over the world.
Cheap appliances sure, but no choice either.