GE sells appliance business to China’s Qingdao Haier for $5.4 bln

“Haier’s proven track record of innovation and GE’s stable of new products and innovation pipeline creates a company that is now the envy of the global appliance industry”, Fischer said in a statement before Friday’s news conference.

GE has shifted emphasis from its traditional businesses like appliances to areas of higher technology such as clean energy and medical equipment.

General Electric Co (GE.N) said on Friday it has agreed to sell its appliances business to Qingdao Haier Co Ltd (600690.SS) for $5.4 billion. The deal was the third major overseas acquisition by a Chinese company this week.

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.

GE was seeking another suitor for the unit after an agreement with Electrolux AB collapsed following opposition from the US Department of Justice.

The deal will leave in place the GE name on the appliances.

GE Appliances is based in Louisville and will remain there.

The GE transaction, however, would vault the Chinese company past Electrolux and other rivals in the United States market for whitegoods.

GE Appliances employs about 12,000 people across the globe and generated about $5.9 billion in revenue and $400 million in Ebitda in 2014. In 2010, a Haier executive said the company didn’t buy at the time because the price for the unit was too high. Haier also tried to buy the Maytag Corp.in 2008, but was outbid by Whirlpool Corp.

Under the agreement, Haier can continue using the GE brand for 40 years, including in China.

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. It will also sharpen its credibility in the USA, where “Chinese brands are perceived as low quality”, said Klaus Meyer, a business professor at China Europe International Business School in Shanghai. On the other hand, China’s Haier Group seems eager to expand its operations in the USA market.

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.

It also provides a new home for the unloved division, and presents a new opportunity to blunt the aggressive inroads of Korean manufacturers LG and particularly Samsung into the USA majap market. “This coming together will further enhance both the Haier and GE brands”.