General Electric sells appliances business for US$5.4bn

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

The Wall Street Journal reported, citing people familiar with the mater, that the Chinese appliance maker outbid other foreign corporate bidders for the business.

The deal is the third largest acquisition of a USA company by a Chinese buyer, and the biggest China outbound acquisition in the consumer products sector on record, according to data tracker Dealogic. In 2014, General Electric’s appliances and lighting business generated $8.4 billion in revenue. It operates a string of 21 industrial parks worldwide. The news release said, “GE will help Haier enhance the efficiency of its manufacturing plants, while Haier will help implement GE’s Predix platform”. Haier owns 41 percent of Qingdao Haier.

Haier’s United States headquarters is located in Wayne, N.J, but GE appliances will remain in its current location in Lousviille, Ky. 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. The purchase includes GE Appliances’ 48.4% stake in Mabe, a Mexican appliance company with which it has operated a joint venture for 28 years.

Hong Kong-listed Haier Electronics Group Co. was increasing capital spending past year as it seeks to capture a greater share of the country’s e-commerce sales and develop more Web-connected appliances users can control with their smartphones, Chairman Zhou Yun Jie has said in an interview.

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.

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.

In 2008, before the aborted Electrolux agreement, GE said it would explore options to sell or spin off the appliances business, concerned that it was too heavily tied to the tumultuous US market.

When General Electric’s $3.3 billion deal to sell its iconic appliances division to Swedish-based Electrolux soured, the industrial giant turned lemons into lemonade. The US anti-trust regulator jammed the transaction, stating that the conglomerate would eliminate competition in the market and result in higher prices of kitchen appliances.