While the price tag is higher than the $2.5 billion figure people familiar with the deal suggested to Reuters last week, analysts said the company was not overpaying. The deal includes GE's 48.4 percent stake in Mexican appliances maker Mabe.
Electrolux said the price was 7.0 to 7.3 times GE Appliance's estimated 2014 earnings before tax, interest, depreciation and amortization (EBITDA), based on an enterprise value (including debt) of $3.45 billion, according to Thomson Reuters data.
Including expected annual cost savings of around $300 million, the multiple paid for GE would be much lower at around five times EBITDA, Electrolux Chief Financial Officer Tomas Eliasson told a conference call.
"If they manage to realise the synergies, it's clearly a good multiple," said Kepler Cheuvreux analyst Johan Eliason, adding the inclusion of the Mabe stake would strengthen Electrolux's position in Latin America on top of the clout it is gaining in North America.
"They're getting access to both North and South America in a very good way, and will become very strong in all of the Americas," Eliason said.
The deal will be financed by a bridge facility and the company plans a rights issue to raise about 25 percent of the price after the deal's expected closing next year, Electrolux said.
Investor, the investment company founded by Sweden's Wallenberg family and owner of 15.5 percent of Electrolux's capital, gave the deal and the right issue its stamp of approval.
"As the leading owner, with a long-term ownership horizon, we find Electrolux's acquisition of GE Appliances industrially attractive and fully support it," Investor Chief Executive Börje Ekholm said.
Electrolux shares rise
Electrolux shares were up 5.9 percent at 198.60 crowns in midday trading, outperforming the wider Stockholm market, giving the company a market capitalization of $8.7 billion.
General Electric put the profitable but low-margin appliance business up for sale in 2008 but talks fizzled out as the global recession took hold. The unit is almost exclusively focused on the U.S. market and has lacked global scale.
GE said last month that it was evaluating strategic options for the home appliance business, including discussions with Electrolux.
Last year, GE Appliances - which sells refrigerators, ovens, air conditioners and water heaters and air conditioners under the GE Monogram, GE Cafe and Hotpoint brands - had sales of $5.7 billion, 90 percent of which were in North America, with EBITDA of $390 million, including the share of profit from Mabe.
Electrolux, which sells under brands such as Frigidaire, AEG and Zanussi as well as its own name, is the world's second-largest home appliance maker after Whirlpool, but has its strongest market position in Europe.
In 2013, western Europe accounted for 28 percent of group sales while North America represented 32 percent. Organic growth in North America was 7 percent while in Europe it was 0.4 percent.
Rival Whirlpool had revenues of $18.8 billion in 2013 against $22.5 billion for a combined Electrolux and GE Appliances.
Whirlpool has also been on the acquisition path, buying a 60 percent stake in Italian firm Indesit, which had revenues of 2.7 billion euros ($3.49 billion) in 2013. It has also agreed to buy Hefei Rongshida Sanyo Electric which had 2013 revenues of around $850 million.
Deutsche Bank and SEB Corporate Finance were Electrolux's financial advisors on the deal, while Davis Polk & Wardwell was lead legal advisor. GE was advised by Goldman Sachs and law firm Sidley Austin.
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The acquisition will double the company's size in the U.S. under the Frigidaire and Electrolux brands, McLoughlin said. "That combination also increases the size of the total Electrolux group by about a third," he said. "So yes, it has a significant consolidation, leverage scale effect."
McLoughlin said that the acquisition is "clearly, an offensive play," that will give the company "a much stronger balance sheet."
—By Reuters. CNBC contributed to this report.