Ltd. has agreed to buy the electric appliances business of General Electric for US$5.4 billion in cash, as part of a strategic cooperation framework between the two companies, according to a company announcement.
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Jeff Immelt the CEO and chairman at GE said that Haier was committed to expanding it business globally.
Under the terms of the agreement, Qingdao Haier agreed to keep GE Appliances headquartered in Louisville, Kentucky, and to keep the current management team in place.
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.
GE said that the deal is expected to generate a gain after taxes of approximately 20 cents a share when it closes, which will be mostly offset by the company’s restructuring in 2016.
This video includes images from Getty Images.
GE is also selling most of its finance arm, or about $200 billion in assets.
GE and Haier also announced on Friday they will cooperate in industrial internet, healthcare and advanced manufacturing.
The deal comes just a month after GE pulled the plug on a previously announced $3.3 billion sale of the division to Electrolux, which ran into opposition from US regulators.
“Given the number of industry participants, a merger which combines a 5-percent market share participant doesn’t seem to me to raise significant antitrust concerns”, said Seth Bloom, a veteran of the Justice Department who now heads Bloom Strategic Counsel, a firm specializing in public policy, government relations, and antitrust analysis.
GE’s Immelt hailed the agreement as “a good deal which will benefit our investors, customers and employees”.
In addition, Haier has said they would like to distribute GE-branded, American-made products to China.
Prior to this deal, Haier commanded about 10% of the global appliances market, but less than 1% of the lucrative US market, which has been growing by 6.1% annually over the last three years.
Haier is one of the world’s largest home appliance manufacturers.
Haier was the first Chinese company to establish manufacturing operations in the US. Both companies will also work together to develop and grow affordable consumer health initiatives in China, according to the statement. Furthermore, there are not many synergies for appliances with GE’s other industrial businesses nor do the buyers have much use for GE Capital.
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The two said this sale would be subject to antitrust and regulatory approves within both companies.
