The logo of US conglomerate General Electric is pictured at the company’s site in Belfort.
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If completed, the size of the deal would make it the largest Chinese purchase of an electronics business overseas, surpassing state-backed Tsinghua Holdings Co’s (清華控股) plans for a US$3.8 billion investment in Western Digital Corp announced a year ago and Lenovo Group Ltd’s (聯想) US$2.8 billion acquisition of Motorola Mobility Group in 2014, according to data compiled by Bloomberg.
The deal, which has been approved by both companies’ boards, is subject to regulatory and shareholder approvals, GE said.
The Chinese firm was “committed to growing the business globally”, GE chairman and CEO Jeff Immelt said in a statement, calling the agreement “a good deal which will benefit our investors, customers and employees”.
For almost 60 years, GE’s Appliance Park has been a fixture of the community and he expects that to continue for decades to come, Crockett said.
Electrolux’s negotiations were cut short when the U.S. Justice Department advised a federal court to halt a possible deal because of antitrust concerns.
Zhang Ruimin, CEO of the company acquiring GE, is recognized not just for leading a high-performing and truly entrepreneurial global business but also for organizing that company around a conceptual framework that has guided its development for years.
Haier will keep the GE Appliance brand as well as retain its Louisville, Kentucky headquarters, along with its management teams, said the two companies.
The unit also maintains a 48 percent equity stake in Mabe, the No. 1 majap maker in Mexico.
Haier Director David Liu said in a press release that GE’s appliances unit “has significant strategic value for Haier”.
Added John Crockett, the incoming chairman of Greater Louisville, Inc.: “It appears to be the best-case scenario for GE Appliance Park and for our city”. The cherry on top is the $175 million breakup fee that GE received from Electrolux when that deal was terminated.
“This is the chance of a life-time for Haier to become big outside China and specifically United States, hence they are willing to pay this very high price tag”, Kepler Cheuvreux analyst Johan Eliason told Reuters.
The transaction is expected to close in mid-2016.
GE doesn’t sell its appliances in India even though some distributors offer its products after importing it on their own.
Prior to Friday’s announcement, the company was already the largest home appliance manufacturer in the world.
GE and Haier also entered into a long-term partnership around health care, advanced manufacturing and software-focused digital operations.
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The street is mostly Bullish on GE stock.
