AEG white goods unit raises pounds 400m: 6,000 jobs to be axed in deal with Electrolux

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The Independent Online
AEG, the troubled electronics unit of Daimler-Benz, is to sell its household goods division to Electrolux of Sweden for an estimated DM1bn ( pounds 400m).

The move is part of a radical restructuring that will see AEG focus on rail technology as part of efforts to weld car, aerospace and railways interests into an integrated global transportation concern.

The group said yesterday that activities that lacked a strategic function as part of the core business would be discontinued. Electrolux, Europe's biggest maker of washing machines, vacuum cleaners and other white goods, already owns 10 per cent of AEG's household division, and will take over the remaining 90 per cent.

The household division, although profitable with a 14 per cent market share in Germany and the leading German make in Britain, is too small to compete internationally with giants such as Electrolux, Whirlpool and Matsushita.

Siemens, Germany's other main white goods producer, is expected to wield its considerable political power in an attempt to block the takeover.

AEG's household division had sales of DM2.7bn in 1992. The Daimler-Benz unit also announced plans to place its low-voltage electricity business in a joint venture with General Electric, in which the US company would have the majority interest. Further steps include the sales of AEG's industrial lighting and its electricity meters businesses and production sites in several European countries.

AEG said that, in addition to concentrating on traditional activities of automation and power transmission and distribution, it would be the link within the Daimler group for tasks supporting the automotive and aerospace sectors.

AEG will take over Daimler's diesel engine activities, and responsibility for micro-electronics within the group. In what may be the first step towards the end of AEG as an independent company, it will take on the title of 'AEG Daimler-Benz Industrie'.

Ernst Georg Stoeckl, AEG chairman, said sales would be cut by the restructuring to DM10.6bn from DM11.6bn in 1992. At the same time the group would be slimmed by more than 6,000 staff from the current total of 58,000 when the restructuring is over at the end of 1994. Mr Stoeckl said he expected AEG, whose operating losses doubled in 1992 to DM200m, to be in the black by 1995.

AEG has never recovered from near bankruptcy in the late Seventies, despite being taken-over by Daimler-Benz in 1986. The hoped for synergies from linking up with Germany's largest industrial conglomerate never materialised. AEG has continued to be a large burden on Daimler, which has been pushed heavily into loss by the downturn in the car and aviation markets.

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