By Dominic Chopping
STOCKHOLM-- Electrolux AB boss Keith McLoughlin has vowed to
press ahead with the $3.3 billion purchase of General Electric
Co.'s appliance business despite Wednesday's move by the U.S.
Department of Justice to try to block the deal.
Electrolux shares plunged 10% on the Stockholm bourse as
investors digested the unexpected obstacle the Swedish company
faces in trying to bulk up in North America to compete better with
Whirlpool Corp., its main rival.
"We intend to get the deal done this year," the Swedish
company's chief executive said on Thursday.
The U.S. Justice Department said late on Wednesday it would take
the case to court on the grounds that it would harm competition in
the white-goods sector, particularly in the market for cooking
appliances--like ranges and wall-mounted ovens--sold to "contract
channel" customers such as home-building companies, property
managers and hotels.
The Justice Department lawsuit argues that only appliance makers
with an array of products can meaningfully compete for those
customers. The Electrolux purchase would leave only one other major
competitor in the market, namely Whirlpool, with the three
companies currently accounting for more than 90% of sales of major
cooking appliances to contract purchasers, the suit alleges.
Mr. McLoughlin said Electrolux is confident of presenting its
case in front of a neutral judge and getting the go-ahead to
complete the deal.
The U.S. industry is competitive and will become more so,
meaning consolidation is needed to increase scale and fund
innovation, which would give consumers more, not less, choice, he
said.
Electrolux will start talks with the Justice Department to see
if a solution can be found before the case reaches court, he added.
Company attorneys have said the Justice Department process can take
up to six months.
Separately, Mr. McLoughlin said he has no plans to step down,
saying the media had got mixed up in reporting last week that he
was thinking of quitting. Electrolux is searching for candidates to
take the helm of its North American unit, not the whole group. "I'm
committed to the company and will remain that way," he said.
Write to Dominic Chopping at dominic.chopping@wsj.com
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