Selling Its Appliances Arm Could Boost Brand Recognition For GE

General Electric Co. agreed to sell its home-appliances business to China’s Qingdao Haier Co. for $5.4 billion after pulling out of a deal with Electrolux AB last month.

The deal could be announced as soon as Friday, although the timing could defer, the paper said. Ltd. agreed to pay $5.4 billion for GE Appliances. Haier is far larger.

Haier, headquartered in the eastern Chinese city of Qingdao, makes a wide range of refrigerators, washing machines and other home appliances. It said Haier’s six foreign acquisitions to date total $6.3 billion.

Louisville Mayor Greg Fischer said the deal will create a company “that is the envy of the global appliances industry”. Qingdao Haier is listed on the Shanghai stock exchange.

The news comes weeks after GE walked away from a deal to sell the business to Electrolux for $3.3 billion, following months of opposition from USA antitrust regulators.

Moreover, Justice Department Lawyer Ethan Glass indicated that the acquisition by Electrolux could lead the appliances to rise as much as 5%. GE also will help Haier improve its manufacturing efficiency.

That means the two have little geographic overlap. She said appliance sales are rising “as the residential housing market picks up speed”. “There is little to no overlap which is very different from the Electrolux situation where there was considerable overlap”.

“Haier is committed to investing in the US”, he continued.

By acquiring GE’s division, it may also be able to expand its presence into emerging markets.

Steven Winoker, an analyst who follows GE for Alliance Bernstein, said Friday in a research note that the Haier deal is not likely to draw antitrust objections, because Haier has only a 1.1 percent share of the US consumer appliance market. “Its customer base and established distribution channels in the U.S. will give the potential buyer a competitive edge”.

Haier Group CEO and Chairman Zhang Ruimin said both companies share a common vision. Europe, Middle East and Africa accounted for 35% while Latin America made up 21%. Therefore, the deal, if completed, will be beneficial for both companies.

Market for niche products is now dominated by Whirlpool Corp.

The two companies will work together on projects related to the industrial internet, healthcare, and advanced manufacturing.

Haier said it will continue to use the GE Appliances brand and retain its headquarters in Louisville, Kentucky along with its current management team.

The sale GE Appliances has always been in the offing.