Electrolux to acquire GE Appliances

AB Electrolux today announced it has entered into an agreement to acquire the
appliances business of General Electric (“GE Appliances”), one of the premier
manufacturers of kitchen and laundry products in the United States, for a cash
consideration of USD 3.3 billion. The acquisition enhances Electrolux’s position
as a global player in home appliances, offering an unparalleled opportunity to
invest in innovation and growth, which will benefit consumers, retailers,
employees and shareholders.
Highlights

  · Attractive strategic fit in North America.
  · Significant synergies, primarily in sourcing and operations.
  · Cash consideration of USD 3.3 billion.
  · Transaction expected to be EPS accretive from year one.
  · Financing is provided by a committed bridge facility and the transaction is
not subject to any financing conditions. A rights issue corresponding to
approximately 25% of the consideration is planned following completion of the
acquisition.
  · Completion of the acquisition is mainly subject to regulatory approvals.

“This is an historic moment and important strategic move for the Electrolux
Group, which takes our company to a new level in terms of global reach and
market coverage. GE’s premium, high-quality appliances complement our own iconic
brands and will enhance our presence in North America” said Keith McLoughlin,
President and CEO of Electrolux. “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.”

Jeff Immelt, Chairman and CEO of GE, said, “Electrolux is the right global
business for our customers, consumers and employees. GE Appliances’ people,
valuable home appliances brand, products, distribution, and service capabilities
make it a perfect fit with Electrolux and its goal of accelerating growth in the
U.S.”

Description of GE Appliances

GE Appliances is headquartered in Louisville, Kentucky, and generates more than
90% of its revenue in North America. GE Appliances’ product portfolio includes
refrigerators, freezers, cooking products, dishwashers, washers, dryers, air
conditioners, water filtration systems and water heaters. Its revenue split by
major product category is approximately 35% cooking, 25% refrigeration, 20%
laundry, 10% dishwashers and 10% home comfort (A/C). The company operates its
own distribution and logistics network and has nine well-invested manufacturing
facilities with 12,000 employees.

The acquisition includes a 48.4% shareholding in the Mexican appliance company
Mabe. For nearly 30 years, GE Appliances has had a joint venture with Mabe in
Mexico where Mabe develops and manufactures portions of GE Appliances’ product
offering.

In 2013, GE Appliances had sales of USD 5.7 billion (SEK 37 billion) and an
EBITDA of USD 390 million (SEK 2.5 billion) including share of income from Mabe.

Transaction rationale and synergies

The acquisition of GE Appliances is an important step for Electrolux towards
realizing the Group’s vision: to be the best appliance company in the world as
measured by customers, employees and shareholders.

The scale and efficiencies from combining the businesses create a solid
financial foundation from which to drive growth in the increasingly global and
competitive appliance industry. The Electrolux Group will further strengthen its
capacity to invest in innovation and growth.

The fit between Electrolux and GE Appliances creates a strong platform for
growth in the North American appliance market and enables the combined business
to better serve North American consumers. GE Appliances has a strong offering to
consumers complementing Electrolux’s current brands in the United States.
Electrolux has secured the right to the GE Appliances brands through a long term
license agreement with GE. GE Appliances’ nationwide distribution and logistics
network also provides an opportunity to offer an even wider range of products to
a broader consumer base.

“GE Appliances is a well-run operation with strong capabilities in key areas
such as R&D, engineering, supply chain and customer service, and we look forward
to joining forces with their team of talented and competent people,” Keith
McLoughlin said.

The transaction is expected to generate annual cost synergies of approximately
USD 300 million. One-off implementation costs and capital expenditures are
estimated to USD 300 million and USD 50‑70 million respectively. The largest
parts of the synergies are expected in sourcing, operations, logistics and
brands.

Proforma financials

The proforma combined 2013 sales figure for Electrolux and GE Appliances is USD
22.5 billion (SEK 147 billion) and EBITDA is USD 1.5 billion (SEK 9.7 billion).
Electrolux and GE Appliances together have 73,000 employees.

Key financials 2013 (before synergies):

+----------------+----------+----------------------------------+--------+
|USD billion     |Electrolux|GE Appliances incl. 48.4 % of Mabe|Combined|
+----------------+----------+----------------------------------+--------+
|Sales           |16.8      |5.7                               |22.5    |
+----------------+----------+----------------------------------+--------+
|EBITDA          |1.1       |0.4                               |1.5     |
+----------------+----------+----------------------------------+--------+
|EBITDA margin, %|6.8       |6.8                               |6.8     |
+----------------+----------+----------------------------------+--------+

Note: Figures in SEK have been converted to USD at an exchange rate of SEK/USD
6.515, the average exchange rate in 2013

The above figures are for illustrative purposes and do not include any impact
from synergies, implementation costs and amortization of surplus values
resulting from the purchase price allocation.

The effect of the transaction on Electrolux’s earnings per share is expected to
be accretive from year one. The EBITDA multiple for the full year 2014 is
expected to be in the range of 7.0-7.3x.

The transaction is expected to contribute positively to cash flow. The financial
position of Electrolux, after completion of the planned rights issue, is
expected to be consistent with a financial policy to retain an investment grade
credit rating.

Transaction terms and timing

Electrolux will acquire GE Appliances for a cash consideration of USD 3.3
billion. The deal is structured primarily as an asset transaction.

Completion of the transaction is mainly subject to regulatory approvals. The
acquisition is expected to close during 2015.

As is customary in the United States in certain types of transactions,
Electrolux has agreed to pay a termination fee of USD 175 million in certain
circumstances involving the failure to obtain regulatory approvals.

Financing

The acquisition of GE Appliances will be funded by a committed bridge facility
arranged by Deutsche Bank AG and Skandinaviska Enskilda Banken AB (publ). The
bridge facility is planned to gradually be replaced by capital market and bank
financing (approximately 75%) and a rights issue (approximately 25%). The Board
of Directors of Electrolux will invite the shareholders to a general meeting and
make a proposal on the rights issue. The rights issue is intended to be
completed following completion of the transaction.

Advisors

Deutsche Bank and SEB Corporate Finance are acting as financial advisors to
Electrolux. Davis Polk & Wardwell is acting as lead legal advisor to Electrolux.

Investor and press telephone conference today

The telephone conference will begin at 08.30 CET (02.30 ET). The conference will
be chaired by Keith McLoughlin, President and CEO of Electrolux. Mr. McLoughlin
will be accompanied by Tomas Eliasson, CFO.

Details for the call are as follows:

Participants in Sweden should call + 46 8 505 564 74

Participants in the UK/Europe should call +44 203 364 5374

Participants in the U.S. should call +1 855 753 2230

The call will be broadcasted live at http://www.electrolux.com/ir, where a slide
presentation also will be available.
Contacts for further information

International and European media: Daniel Frykholm, Head of Group Media
Relations, +46 73 885 71 59

North American media: Eloise Hale, Vice President Communications Electrolux
North America, +1 980 236 2929

Investors and financial analysts: Catarina Ihre, Vice President Investor
Relations, +46 70 607 92 63

Alternatively, please contact Electrolux Press Hotline, +46 8 657 65 07

Electrolux discloses the information provided herein pursuant to the Securities
Market Act and/or the Financial Instruments Trading Act. The information was
submitted for publication at 07.30 CET on September 8, 2014.
Electrolux is a global leader in home appliances, based on deep consumer insight
and developed in close collaboration with professional users. We offer
thoughtfully designed, innovative solutions for households and businesses, with
products such as refrigerators, dishwashers, washing machines, cookers, vacuum
cleaners, air conditioners and small domestic appliances. Under esteemed brands
including Electrolux, AEG, Zanussi, Frigidaire and Electrolux Grand Cuisine, the
Group sells more than 50 million products to customers in more than 150 markets
every year. In 2013, Electrolux had sales of SEK 109 billion and 61,000
employees. For more information go to http://group.electrolux.com.