GE selling home appliance business to Chinese company
BEIJING -- Haier Group, the world's biggest home appliance maker, is buying General Electric Co.'s (GE) appliance business for $5.4 billion to expand its U.S. and global presence.
The acquisition announced Friday comes as Haier tries to transform itself into a premium brand. GE is shifting emphasis from traditional businesses such as appliances, in which it has been a prominent presence for more than a century, to higher-technology areas such as medical equipment and clean energy.
The two companies also agreed to form a strategic partnership to cooperate in areas such as the Internet, healthcare, and advanced manufacturing. They said the sale is subject to regulatory and anti-trust approvals in relevant countries.
The purchase is the third in a string of multibillion-dollar foreign acquisitions this week by Chinese buyers.
On Tuesday, conglomerate Wanda Group said it was buying Hollywood's Legendary Entertainment for $3.5 billion. The previous day, a state-owned chemical company announced the purchase of a German manufacturer for $1 billion.
Chinese companies are on a buying spree abroad, looking for technologies and brands to improve their competitive position at home and speed their global expansion.
Haier, headquartered in the eastern Chinese city of Qingdao, makes a wide range of refrigerators, washing machines and other home appliances. It reported 2014 revenue of $32.6 billion. It operates a string of 21 industrial parks worldwide.
Haier said the GE acquisition would be carried out by its unit Qingdao Haier Co. Ltd., a publicly traded entity of which Haier owns 41 percent.
GE Appliances, headquartered in Louisville, Kentucky, reported $5.9 billion in 2014 revenue. It has 12,000 employees, 96 percent of them in the United States.
The two companies said GE Appliances would gain more access to the growing Chinese consumer market. The purchase includes GE Appliances' 48.4 percent stake in Mabe, a Mexican appliance company with which it has operated a joint venture for 28 years.
"This strategic alliance provides a new starting point for both Haier and GE and I am confident that this partnership will deliver enhanced value to the stakeholders of both companies," Haier Group chairman Zhang Ruimin said in a statement.
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.
"Haier has a stated focus to grow in the U.S., build their manufacturing presence here and to invest further in the business," GE chief executive Jeff Immelt said in the joint statement. "In addition, we see the opportunity to work together to build the GE brand in China."
GE, headquartered in Fairfield, Connecticut, announced plans earlier to sell the appliance business to Sweden's Electrolux for $3.3 billion. They called that off in December after opposition from American anti-trust regulators.