GE previously tried to sell the business last December to Swedish giant Electrolux for $3.3 billion, but walked away from the deal after opposition from American antitrust regulators.
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Haier will continue to use the GE Appliances brand and retain its headquarters in Louisville, Kentucky along with its current management team, the companies said.
One analyst based in Hong Kong said the acquisition by Haier would give the company a better channel for sales in the USA and a stronger relationship with retailers.
Higher price. The deal with Haier values the business unit at 10x LTM EBITDA and is expected to bring a post-tax gain of $0.20 for General Electric which they expect to offset with restructuring during FY16… It reported 2014 revenue of $32.6 billion.
Hong Kong-listed Haier Group’s share price rose 1% to HK$12.84 following the news, in contrast to Midea’s, which fell 4% to Rmb28. The companies are targeting a relatively speedy “mid-2016” closing since Haier, a new player in the US appliances market, is unlikely to face significant antitrust obstacles. The deal would have made Electrolux surpass Whirlpool as the world’s largest appliance maker. China National Chemical Corp. said it will buy the German machinery maker KraussMaffei Group for $1 billion, and Dalian Wanda Group is buying the Hollywood production company Legendary Entertainment for $3.5 billion.
“We’re looking for job security and with Haier I think we’ll get that”, he said.
The transaction, which has been approved by both companies’ boards of directors, is targeted to close mid-2016.
Hoping to expand global reach, Chinese manufacturer Haier has hatched a deal to purchase General Electric’s appliance division, the Wall Street Journal reports.
Haier will also sell GE appliances in China under the agreement.
Haier has limited presence in the United States, hence the acquisition would act complementary to its existing range of products and operations, the person added.
GE and Haier also announced long term strategic partnership to explore cooperation in the areas of industrial internet, healthcare, and advanced manufacturing.
The acquisition announced Friday comes as Haier tries to transform itself into a premium brand.
Zhang is renowned for his reaction to a customer complaint, when he examined the firm’s warehouse and found 76 fridges out of more than 400 in stock were substandard.
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Bank of America Merrill Lynch, and PwC Corporate Finance are advising Qingdao Haier on the M&A, while CICC is an independent financial adviser.
