However, the change is coming about now in part because GE has become more software-focused, working on data analytics and industrial-focused businesses like GE Aviation and GE Power.
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GE’s Immelt hailed the agreement as “a good deal which will benefit our investors, customers and employees”.
Haier said the transaction includes GE Appliances’ 48.4% stake in Mabe, a Mexican appliance company that has a joint venture and a sourcing relationship with the business.
GE said the deal values the appliance business at 10 times last 12 months earnings before interest, taxes, depreciation, and amortisation (EBITDA). The two companies announced the $5.4 billion deal Friday. However, the deal collapsed last month due to an opposition from the US Justice of Department. The union opposed the GE-Electrolux deal because it put GE Appliance Park and potentially thousands of local jobs in jeopardy. Electrolux vigorously contested this effort by the DOJ to oppose the transaction, but in vein, and had to pay a break-up fee of $175 million to GE after the termination of the deal.
GE doesn’t sell its appliances in India even though some distributors offer its products after importing it on their own.
The coming together of Qingdao Haier and GE Appliances will further enhance Qingdao Haier’s global competitiveness.
This acquisition was announced in a prepared statement on Friday and comes as China-based Haier the largest maker of home appliance in the world, attempts to transform into a premium appliance brand.
Haier held talks with GE in 2008 to buy the US firm’s appliance unit.
Haier also made an unsuccessful bid for Maytag Corporation in 2004 but lost out to Whirlpool.
Haier 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.
GE Appliances employs about 12,000, including about 6,000 at its 900-acre Louisville campus, which manufactures household products including dishwashers, refrigerators and hot water heaters. It will also sharpen its credibility in the US, where “Chinese brands are perceived as low quality”, said Klaus Meyer, a business professor at China Europe International Business School in Shanghai.
The Haier Group outbid other foreign corporate bidders for the Louisville, Kentucky-based operation.
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. It’s the leading appliance manufacturer globally, but it can only claim 1.1 percent of the United States appliance market.
“Haier had always fancied themselves the GE of China so now they get the real thing”, Steven Winoker, an analyst at Sanford C. Bernstein & Co., said in a note.
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The move is sure to please the Chinese government, to which Haier has close ties, which is trying to re-balance its economy more towards consumption and away from the infrastructure and investment-driven model of the past.
