Industry NewsGE sells appliances business to China’s Haier for $5.4bn

The deal, which is so far the biggest by Haier and will boost its presence in the USA, valued the business at 10 times earnings before interest, taxes, depreciation, and amortization (EBITDA) in the last 12 months, GE said.

The sale, which is the third largest acquisition of a USA company by Chinese investors, has been approved by the boards of both firms, GE said.

GE chairman/CEO Jeff Immelt, who has long regarded the majap unit as a non-core business, said its solid performance had drawn “significant interest from potential buyers”, and described the new marriage as a good match. This low USA market share was arguably a key selling point for GE, because the sale isn’t as likely to be met with the same resistance from the U.S Justice Department that the Electrolux deal faced.

GE had been trying to sell the appliance business since 2008 but the recession made it impossible for it to get the sale price it was looking for. These sites will not be affected by the GE deal, according to a company representative. The transaction is targeted to close in mid-2016.

Haier has limited presence in the United States, hence the acquisition would be complementary to its existing range of products and operations, the person added.

One analyst based in Hong Kong said the acquisition by Haier would give the company a better channel for sales in the US and a stronger relationship with retailers. Whirlpool Corp is valued at 7.7 times. GE could not be immediately reached for comment outside regular business hours.

Chinese appliance major Quingdao Haier Co.

For Haier, which had $32.6 billion in revenue world-wide in 2014, growth overseas is critical.

GE has been in the electrical household appliance business for more than a century, its work on electrical generators connecting naturally with the kind of motors needed for dishwashers, washing machines, and similar.

Another drag on business is that fewer people in China are buying new homes and thus need fewer new appliances.

Haier’s deal is the biggest of them all.

Haier may also begin exporting goods built in Louisville to China, GE Appliances spokeswoman Kim Freeman said.

The unit also maintains a 48 percent equity stake in Mabe, the No. 1 majap maker in Mexico.

Zhang is credited with building Haier out of a bankrupt refrigerator factory after he was assigned by the Qingdao city government to manage it in 1984. The Chinese company manufactures electronics and appliances but doesn’t have a foothold on the American market.

Louisville Mayor Greg Fischer said the deal will create a company “that is the envy of the global appliances industry”.

As part of the deal, Haier will continue to use GE Appliances’ brand.

Kate Linebaugh contributed to this article.