Stage II: Diversification and M&A

The expansion of Electrolux began when Hans Werthén became president in 1967.

Electrolux acquired 59 companies in 1970s and expanded vigorously throughout 1980’s.

In total more than 200 companies were acquired. Anders Edholm (personal communication, 2004-09-23) points out Electrolux were still a small company/local company manufacturer until the 70’s or 60’s, but then Electrolux started acquiring other companies when Mr. Hans Werthén came in as the CEO of the company. He really made the company into what it is today; we acquired around 400 companies over the 60s, 70s, 80s and part of 90s. The company was very diversified in this period of time and producing everything from white-goods to artificial Christmas tree, plastic, etc.(D.

Leidenborg, personal communication, 2005-02-04)

Until 1989 Electrolux consisted of six business areas – Household appliances, Commercial appliances, Commercial services, Outdoor products, Industrial products,

Building components – and was a highly diversified company with the focus on external expansion through mergers and acquisitions. In 1990, the Group was comprised of more than 600 companies in over 40 countries with approximately 85%

of sales outside Sweden (Electrolux Annual Report 1990).

Table 4.2 History Timeline of Stage II

History Timeline of Stage II (1967~1990)

Year Descriptions of Events

1967

Hans Werthén becomes president. The restructuring of the divided Western European white-goods industry begins. Electrolux takes the initiative on changes in Scandinavia. The company purchases Norwegian Elektra (cookers), Danish Atlas (refrigerators) followed by Finnish Slev (cookers, sauna units). Vacuum cleaner production moves from Stockholm to Västervik.

1968

The minority interest (39%) in Electrolux Corp., USA, is sold to Consolidated Food for almost SEK 300 million. This deal gives Electrolux the key to future expansion. Cooker production in Sweden is concentrated in Motala and refrigerator production in Mariestad. The lawn mower company, Flymo, with a base in both Sweden and England, is purchased as well as 50% of the cleaning company ASAB. The Group's head office is moved from the city of Stockholm to the factory premises at Lilla Essingen.

1969

Electrolux's first subsidiary in the USA, Domestic Sales Corp (absorption refrigerators) is set up. Subsidiaries are established in Hong Kong to sell the Group products in the Far East. A large scale face lift takes place for the Electrolux range. The environment begins to occupy a central position in public debates.

1971

The commercial cleaning service is established as a result of new company acquisitions. A face-lift for white goods takes place. There is a trend towards new colors. Caravan refrigerators (absorption) are booming on the US market.

1973

The office machinery company Facit is acquired - a purchase outside the principal business sphere of Electrolux. The deal brings with it the production of kitchen and bathroom cabinets (Ballingslöv).

The upswing for the absorption refrigerator technique accelerates. The Group purchases manufacturers in Luxembourg and Germany (Kreft, Siegas) to meet the demand on the European market.

1974 It has long been clear that a powerful foothold in the US household

appliance market is essential. The vacuum cleaner producer NUE - National Union Electric/Eureka - is acquired (today the Eureka Company). This deal makes Electrolux the world's number one producer of vacuum cleaners. It also boosts the Group's air conditioning technology research and know-how resources.

White goods are marketed under the brand names of Enviromental cooker de Luxe, Future Line and Superstar Electronic.

The commitment to nature conservation products, vacuum systems for the transport and cleaning of waste water continues. The ORWAK waste compressor is launched.

1975 A number of small acquisitions in sectors such as laundry-service, materials handling and agricultural machinery take place.

1976

Electrolux moves into the French market. The white-goods manufacturer Arthur Martin and the vacuum cleaner company Tornado are acquired. These deals include Nestor Martin of Belgium and Menalux of Switzerland. The purchase of Tornado also includes a subsidiary in Holland. The acquisition of vacuum cleaner companies in the USA and France strengthens the Group's position in the floor care market.

1978

The Electrolux Swedish household appliance sector is strengthened by the acquisition of Husqvarna. The deal also brings an entirely new addition to the product range - chainsaws. This - in turn - initiates new purchases in the same industry, Partner in the same year and Jonsered and Pioneer in 1979. The white-goods company Therma of Switzerland is acquired.

1979

Electrolux enters the US white goods market through the acquisition of Tappan, in Mansfield, Ohio, a manufacturer of household appliances and cookers.

1980

Electrolux makes an important acquisition. The metal conglomerate Gränges is purchased (mines, steel works, aluminum and copper, vehicle safety belts) for SEK 725 million. The Group's total turnover is almost SEK 23 billion, an increase of 51% compared with the preceding year.

1981

Vacuum cleaner capacity is extended still further through the acquisition of the French company, Paris-Rhône, and the German company, Progress.

1984

The acquisition of the Italian company Zanussi (founded 1916) including its subsidiaries in Spain, makes Electrolux the unquestioned leader in the European market for household appliances.

The Zanussi purchase also makes the Group number one in food service equipment. Sales expansion in the Far East including Oceania: SEK 2 billion.

1985

The white goods sector range of washing machines and tumble driers, and air conditioning is extended through the purchase of Zanker in Germany and Duo-Therm in the USA.

1986

The third largest white goods company in the USA, White Consolidated Inc., is acquired with brands such as Frigidaire, Gibson, Kelvinator and White Westinghouse. The Outdoor Products business area expands following new acquisitions including the US company, Poulan/Weed Eater. The metal recycling company, Gotthard Nilson, is purchased. The Group's total annual sales are SEK 53 billion.

1987

Electrolux purchases the first white goods division of the British company, Thorn-EMI, with brands such as Tricity, Stott Benham and Parkinson Cowan. White goods are also strengthened by the purchase of Corbéro and Domar, Spain's leading companies in this sector.

1988

The outdoor products business is reinforced through the purchase of American Yard Products (Yardpro). The Spanish market grows in importance. The refrigerator compressor producer Unidad Hermética is acquired. Safety belt operations are expanded in Europe.

1989

The Group's leading position in Europe is reinforced by the acquisition of the German Buderus Group's manufacturing operations of white goods and food service equipment, including industrial washing machines. An agreement is signed with Sharp Corporation on the sale of Electrolux white goods on the Japanese market. Iron ore mining with the Lamco company, Liberia (previously owned by Gränges) ceases. The Group winds up its operation in the sterilization and disinfection sectors.