Electrolux Pays $3.3bn for GE Appliances Unit

Sweden's Electrolux has agreed to acquire General Electric's appliances business for $3.3bn in cash, a historic deal that will help Electrolux double sales in North America and take on rival Whirlpool.

Electrolux, the world's second-largest home appliance maker after Whirlpool, has its strongest market position in Europe.

The purchase of GE's appliances business - including refrigerators, air conditioners, water heaters and cookers - will more than double Electrolux's sales in the US from the 31.9bn crowns ($4.5bn, £2.8bn, €3.5bn) it had in 2013, Reuters reported.

The Swedish firm's stock was trading 5.71% higher at 1126 CEST in Stockholm, after rising 9% in morning trade. The stock has gained some 18% so far this year.

Electrolux said in a statement the deal will be financed by a bridge facility arranged by Deutsche Bank and Skandinaviska Enskilda Banken.

It also said it will undertake a rights issue of approximately 25% of the consideration following completion of the acquisition. The acquisition is expected to close in 2015.

The acquisition includes a 48.4% shareholding in Mexican appliance maker Mabe.

The transaction is expected to generate annual cost synergies of about $300m, according to Electrolux. The largest parts of the synergies are expected in sourcing, operations, logistics and brands.

Electrolux chief executive Keith McLoughlin said in the statement: "The acquisition, which is our largest ever, strengthens our commitment to the appliance business and also provides Electrolux with the scale and opportunity to accelerate our investments in innovation and global growth."

Electrolux sells under brands such as Frigidaire, AEG and Zanussi and under its own name.

In 2013, western Europe accounted for 28% of group sales while North America represented 32%. Organic growth in North America was 7% while in Europe it was 0.4%.

In 2013, GE's appliance business clocked sales of $5.7bn, 90% of which were in North America, with earnings before interest, tax, depreciation and amortisation of $390m.