Haier to buy GE’s appliance business for $5.4 billion

China’s Haier Group will buy General Electric’s home appliance operations for $5.4 billion, giving it a foothold to tap such advanced economies as the US and Europe.

General Electric (NYSE:GE) Appliances are being sold to China firm Haier.

If completed, the size of the deal would make it the largest Chinese purchase of an electronics business overseas, surpassing state-backed Tsinghua Holdings Co.’s plans for a $3.8 billion investment in Western Digital Corp. announced a year ago and Lenovo Group Ltd’s $2.8 billion acquisition of Motorola Mobility Group in 2014, according to data compiled by Bloomberg.

Haier, which has a scant presence in the US, said it will keep GE Appliances’ headquarters in Louisville and its management in place – a relief for Louisville leaders concerned about maintaining 6,000 well-paying local jobs.

The company has been mostly present in the highly competitive, so-called “value segment” of the USA market and analysts expressed concern about the impact its bigger presence would have on the pricing dynamics. GE said this will be offset with restructuring this year.

Since then, Haier has re-launched the $500 million business as a mass-premium lifestyle line, and could ostensibly leverage GE’s considerable prowess in laundry, bottom-mount refrigeration, logistics, R&D and the contract channel.

The move comes weeks after GE abandoned a $3.3 billion deal with Sweden’s Electrolux following months of opposition from US antitrust regulators.

Haier said it will have the rights to use the GE brand for appliances for 40 years. Shanghai-listed Qingdao Haier, whose shares have been halted since October 19, will continue to be suspended on January 18.

The Indian white goods market is dominated by the likes of LG, Samsung, Whirlpool, Godrej besides a host of other labels including Haier, Videocon and Electrolux.

Fischer said a challenge for Louisville is to ensure that it’s providing a quality workforce for businesses like GE Appliances.

GE’s well established brand is also “an invaluable asset”, Zhang said.

Moreover, Justice Department Lawyer Ethan Glass indicated that the acquisition by Electrolux could lead the appliances to rise as much as 5%.

If the sale receives regulatory and shareholder approval, Crittendon said the existing union agreement would be honored for the first 12 months, meaning workers’ benefits and pay would stay the same. “In addition, we see the opportunity to work together to build the GE brand in China”.