Date
17 October 2017
General Electric appliances are on display in a store in Westminster, Colorado.  GE is selling its appliance business to focus on its transition to a technology company. Photo: Reuters
General Electric appliances are on display in a store in Westminster, Colorado. GE is selling its appliance business to focus on its transition to a technology company. Photo: Reuters

GE to sell appliance business to China’s Haier for US$5.4 bln

General Electric Co. is selling its appliance business to China’s Haier Group for US$5.4 billion in cash in another step to offload non-core assets anfd turn itslef into a technology company.

The deal comes weeks after GE walked away from a deal to sell the business to Sweden’s Electrolux for US$3.3 billion after months of opposition from US antitrust regulators.

GE said the deal values the appliance business at 10 times earnings in the past 12 months before interest, taxes, depreciation, and amortization.

Whirlpool Corp. is valued at 7.7 times.

GE said earlier this week it would shift its headquarters to Boston, a move aimed at lowering its tax bill and tapping talent in city that is fast becoming a tech hub.

For Haier, the deal means ownership of a century-old appliance business that makes refrigerators, freezers, clothes washers and dryers across brands such as

The business trails only Whirlpool Corp. in the US white goods market and reported revenue of US$5.9 billion last year.

The deal, Haier’s biggest ever, will give a big boost to its US business, which held less than 5 percent of the market last year.

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.

“Even if Haier doesn’t have a history of dumping prices in the United States, as for example LG and Samsung has, this is still an unknown player, a Chinese player,” DNB Bank ASA analyst Christer Magnergard told Reuters.

“[Haier] may have a somewhat different agenda than just having high profitability in the United States in 2016.”

Haier said the transaction includes GE Appliances’ 48.4 percent stake in Mabe, a Mexican appliance company that has a joint venture and a sourcing relationship with the business for 28 years.

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