GE Sells Appliance Unit To Chinese Company For $5.4 Billion

At least four companies, including China’s Midea Group Co., submitted bids for GE’s appliances business this month, people familiar with the matter have said.

The deal, which is so far the biggest by Haier and will boost its presence in the U.S., valued the business at 10 times earnings before interest, taxes, depreciation, and amortization (EBITDA) in the last 12 months, GE said. The U.S. Justice Department had sued to block that transaction, saying the combination would hurt competition for cooktops and ranges. He added that his company Haier was committed to investing within the U.S.

GE has been trying to sell the appliance business because it wants to focus on being an infrastructure and technology company.

After numerous failed attempts to sell its appliance division, General Electric has finally found a likely buyer.

The company has been mostly present in the highly competitive, so-called “value segment” of the US market and analysts expressed concern about the impact its bigger presence would have on the pricing dynamics.

Shanghai-listed Qingdao Haier, which purchased all of Haier’s overseas operations in June and is 50.8% owned by Haier together with United States private equity group KKR, will acquire GE Appliances. Haier had a 1.1 percent share of the USA appliance market previous year, according to Euromonitor.

The deal comes five weeks after GE pulled out of a $3.3 billion buyout by Electrolux amid intransigence by federal regulators who feared a commercial cooking monopoly. Its 1% share of the USA consumer electronics market soar as a result of the deal. In addition, WSJ also stated that the deal could be officially announced as early as Friday; however, the timings of the announcement could still fluctuate.

For Haier, the offer complemented its ambitions of becoming a “world brand”, and represented an opportunity to gain a firm footing on the U.S. appliance market, where it now controls just around one percent.

GE Appliances reported $5.9 billion in 2014 revenue and has 12,000 employees, 96% of them in the United States.

Haier is best known as a manufacturer of household goods including washing machines, refrigerators and microwaves.

The deal with Haier is expected to close in mid-2016.

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

Electrolux, GE and larger competitor Whirlpool (WHR.N) make up more than 90 percent of major kitchen appliances sold to homebuilders, according the DOJ.

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