GE Appliances Being Sold to China Firm Haier

The deal could be announced as soon as Friday, although the timing could defer, the paper said.

Now, a little over a month later, China’s Haier Group has stepped in with a $5.4 billion offer as it looks to expand its global reach and gain a stronger foothold in the USA, a market where Electrolux had been eager to bulk up. Haier’s purchase price is $2 billion more than the $3.3 billion Electrolux had agreed to pay for the business. Haier is far larger.

“We are proud of Appliances’ history and performance”, Jeff Immelt, GE chairman and CEO, said in a blog post. Haier owns 41 percent of Qingdao Haier.

The deal is expected to provide GE Appliances access to the demand for its high-quality products in the China market.

Chinese companies, often with state links, have been stepping up their acquisitions of foreign firms in recent years as growth in the domestic economy slows. Through the end of the year, GE will have invested about $1 billion and hired 3,000 employees in its Louisville facilities since 2011. The deal was scrapped recently due to opposition from US regulators. Haier is unlikely to face the same antitrust hurdles as Electrolux because of its small presence in the U.S.

That means the two have little geographic overlap.

“We have to increase our commitment to workforce development”, he said. “There is little to no overlap which is very different from the Electrolux situation where there was considerable overlap”.

The move is sure to please the Chinese government, to which Haier has close ties, which is trying to re-balance its economy more towards consumption and away from the infrastructure and investment-driven model of the past. It opened a factory in SC in 2000, mainly to make refrigerators, according to its website.

Hainer has already announced that it intends to keep the current management of GE Appliances, including CEO Chip Blankenship. GE expects the deal will generate an after-tax gain of $0.20 per share, which will be offset from the ongoing restructuring that the company is doing to exit the financial services business. “Its customer base and established distribution channels in the United States will give the potential buyer a competitive edge”. “It’s also likely that they will have more synergy as Haier is developing smart appliances”.

“The two fastest-growing regional markets projected for consumer appliances over 2015-2020 are [the] Middle East and Africa and Asia Pacific”, said Zhang. The business reported revenue of $5.9 billion past year.

That is appealing for a company seeking to both grow and diversify its revenues.

“We’re looking for job security and with Haier I think we’ll get that”, he said.

Market for niche products is now dominated by Whirlpool Corp.