China's Haier Near Deal to Buy GE Appliance Business -- Update
January 14 2016 - 10:17PM
Dow Jones News
By Joann S. Lublin, Dana Mattioli and Ted Mann
General Electric Co. is near a deal to sell its appliance
business to China's Haier Group for more than $4 billion, according
to people familiar with the matter, after GE's previous effort to
sell the unit for a lower amount was blocked by antitrust
regulators.
The Chinese appliance maker outbid other foreign corporate
bidders for the Louisville, Ky.-based business, according to one of
the people. Two other people familiar with the matter said a deal
could be announced as soon as Friday, although as with all deals,
timing could slip.
GE has been running an auction for the century-old appliance
business since it abandoned a $3.3 billion sale to Sweden's
Electrolux AB in December. The U.S. Justice Department had sued to
block that transaction, saying the combination would hurt
competition for cooktops and ranges.
GE declined to comment. Haier didn't immediately respond to a
request for comment.
GE has previously told investors that demand for the appliances
business has been strong, and that it expected to move quickly to
find a new buyer. In seeking a fresh buyer, GE executives wanted "a
better deal" than they had gotten from Electrolux, one person
familiar with the matter said. GE also stands to receive a $175
million breakup fee from Electrolux.
The conglomerate is exiting one of its legacy business lines
amid a companywide reorientation by Chief Executive Jeff Immelt,
who wants to focus on its high-tech, high-value products like power
turbines, jet engines and oil-and-gas production equipment. Earlier
this week, GE said it would move its headquarters from Fairfield,
Conn., to Boston.
GE had tried to sell the unit before the financial crisis but
had to pull the sale when markets turned.
Haier has struggled to gain more than a small foothold in the
U.S. While it calls itself the biggest appliance maker in terms of
unit sales, Haier is mainly known in the U.S. for niche products
such as compact refrigerators and window air-conditioning
units.
The privately held company also has been expanding its range of
products and retail partners in the U.S. In August, Haier said it
would invest $72 million to expand its 15-year-old refrigerator
plant in Camden, S.C.
The GE transaction, however, would vault the Chinese company
past Electrolux and other rivals in the U.S. market for white
goods, which is currently led by Whirlpool Corp. Sales for GE
Appliances and Lighting, of which appliances is the lion's share,
were $8.4 billion in 2014.
Haier held talks with GE in 2008 to buy the U.S. firm's
appliance unit. 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 made an unsuccessful bid for Maytag Corp. in 2004 but lost out
to Whirlpool.
Kate Linebaugh contributed to this article.
(END) Dow Jones Newswires
January 14, 2016 23:02 ET (04:02 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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