Home
China’s Haier to Buy GE Appliance Business for $5.4 Billion
General Electric Co. refrigerators for sale at the Lowe's Co. store in Torrance, California. China’s Haier is to acquire GE’s appliance business. Photo: Bloomberg News
By
Laurie Burkitt,
Joann S. Lublin And
Dana Mattioli
Updated Jan. 15, 2016 5:17 a.m. ET
BEIJING— General Electric Co. agreed to sell its appliance unit for $5.4 billion to Chinese manufacturer Haier Group, which is looking to expand its products into homes around the world.
GE and Haier announced the deal Friday, saying the companies will cooperate world-wide to expand their reach in health care, advanced manufacturing and the industrial sectors.
The deal will help Haier sell refrigerators, washing machines and other larger appliances overseas after years of struggling to gain a stronger foothold in the U.S. and elsewhere. Haier said it would have the rights to use the GE brand for appliances for 40 years.
The acquisition also enables GE to focus on its industrial business—including jet engines and power turbines—instead of washing machines or even finance.
“Haier has a good track record of acquisitions and of managing brands,” GE Chairman and Chief Executive Jeff Immelt said in a news release. “Haier has a stated focus to grow in the U.S., build their manufacturing presence here, and to invest further in the business.”
Qingdao Haier Co., a Shanghai-listed company in which Haier owns 41%, will acquire the GE appliance unit, Haier said. It said the deal “establishes a model for cross-border investment and cooperation between China and the United States.”
The deal, which values GE Appliances at 10 times the last 12 months of earnings before interest, taxes, depreciation and amortization, according to GE, was reported earlier by The Wall Street Journal.
It marks the third major overseas acquisition by Chinese companies this week.
A consortium of investors including China National Chemical Corp. on Sunday agreed to buy KraussMaffei Group for €925 million ($1 billion), one of the largest Chinese takeovers of a German company. Two days later, Chinese conglomerate Dalian Wanda Group Co. agreed to acquire production and finance company Legendary Entertainment for $3.5 billion in cash, the largest China-Hollywood deal to date.
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. The U.S. Justice Department had sued to block that transaction, saying the combination of the two companies would hurt competition for cooktops and ranges. Haier may face fewer antitrust hurdles than Electrolux because of its small presence in the U.S.
In seeking a fresh buyer, GE executives wanted a better deal than they had gotten from Electrolux, one person familiar with the matter said. GE also stands to receive a $175 million breakup fee from Electrolux.
The Chinese appliance maker outbid other foreign corporate bidders for the Louisville, Ky.-based business, according to a person close to the deal.
Haier has struggled to compete in the U.S. While it calls itself the biggest appliance maker in terms of unit sales, Haier is mainly known in the U.S. for products such as compact refrigerators and window air-conditioning units.
The privately held company has also been expanding its range of products and retail partners in the U.S. In August, Haier said it would invest $72 million to expand its 15-year-old refrigerator plant in Camden, S.C.
The GE transaction, however, will vault the Chinese company past Electrolux and other rivals in the U.S. market for white goods, which currently is led by Whirlpool Corp. Sales for the GE Appliances and Lighting division, of which appliances is the lion’s share, were $8.4 billion in 2014.
Haier held talks with GE in 2008 to buy the U.S. firm’s appliance unit. In 2010, a Haier executive said the company didn’t buy at the time because the price for the unit was too high. Haier also made an unsuccessful bid for Maytag in 2004, but lost out to Whirlpool.
Since then, Haier has been vying for more U.S. retail partners, tapping major advertising agencies in an effort to become a household name. Haier held a 29.8% market share of major household appliance sales in China last year, compared with 5.6% in the U.S., according to market research firm Euromonitor.
For Haier, which had $32.6 billion in revenue world-wide in 2014, growth overseas is critical. Profit margins from the company’s refrigerators and washing machines in China are razor-thin due to increased competition at home, where online shopping has sparked price wars, pushing down prices in the electronics and appliances sector.
Another drag on business is that fewer people in China are buying new homes and thus need fewer new appliances.
The deal will broaden Haier’s customer base and distribution channels. It could also sharpen its credibility in the U.S., where “Chinese brands are perceived as low quality,” said Klaus Meyer, a business professor at China Europe International Business School in Shanghai.
Based in China’s northeastern coastal city of Qingdao, Haier is one of China’s legacy state-owned enterprises. Haier’s chief executive, Zhang Ruimin, was the general manager when the company started in 1984 as a successor to a loss-making refrigerator factory that had been opened in 1949, when Chairman Mao Zedong founded modern China.
Mr. Zhang, now 67, is well known in business circles back home, building a no-nonsense reputation when, as newly appointed chairman in 1985, he smashed with a sledgehammer a faulty refrigerator to demonstrate zero tolerance for shoddy products at the factory.
Within his first decade as chairman, he transformed Haier, creating China’s largest appliance maker and becoming the first businessman appointed to China’s Central Committee, one of the Communist Party’s highest decision-making bodies.
Mr. Zhang built the brand by investing in a cartoon in the 1990s called the “Haier Brothers,” creating mascots that many in China recognized long after the airing of more than 200 episodes. Today, Haier has become one China’s most valuable brands, worth $1.9 billion in 2015, according to media agencies Millward Brown and WPP, which calculated the value using the company’s financial data and consumer-survey data.
GE Appliances will keep its headquarters in Louisville, Ky, the companies said.
Haier said in a statement to the Shanghai Stock Exchange that Qingdao Haier would be required to pay $200 million to $400 million to GE as compensation if the deal falls apart because to failure to obtain approvals from antitrust regulators, Chinese regulators or the company’s shareholders,
The GE assets that Haier agreed to acquire had a book value of $1.84 billion dollars as of the end of 2014.
—Ted Mann in New York and Rose Yu in Shanghai contributed to this article.
Write to Laurie Burkitt at laurie.burkitt@wsj.com, Joann S. Lublin at joann.lublin@wsj.com and Dana Mattioli at dana.mattioli@wsj.com
Qingdao Haier Co., a Shanghai-listed company in which Haier owns 41%, will acquire the unit
General Electric Co. refrigerators for sale at the Lowe's Co. store in Torrance, California. China’s Haier is to acquire GE’s appliance business. Photo: Bloomberg News
By
Laurie Burkitt,
Joann S. Lublin And
Dana Mattioli
Updated Jan. 15, 2016 5:17 a.m. ET
BEIJING— General Electric Co. agreed to sell its appliance unit for $5.4 billion to Chinese manufacturer Haier Group, which is looking to expand its products into homes around the world.
GE and Haier announced the deal Friday, saying the companies will cooperate world-wide to expand their reach in health care, advanced manufacturing and the industrial sectors.
The deal will help Haier sell refrigerators, washing machines and other larger appliances overseas after years of struggling to gain a stronger foothold in the U.S. and elsewhere. Haier said it would have the rights to use the GE brand for appliances for 40 years.
The acquisition also enables GE to focus on its industrial business—including jet engines and power turbines—instead of washing machines or even finance.
“Haier has a good track record of acquisitions and of managing brands,” GE Chairman and Chief Executive Jeff Immelt said in a news release. “Haier has a stated focus to grow in the U.S., build their manufacturing presence here, and to invest further in the business.”
Qingdao Haier Co., a Shanghai-listed company in which Haier owns 41%, will acquire the GE appliance unit, Haier said. It said the deal “establishes a model for cross-border investment and cooperation between China and the United States.”
The deal, which values GE Appliances at 10 times the last 12 months of earnings before interest, taxes, depreciation and amortization, according to GE, was reported earlier by The Wall Street Journal.
It marks the third major overseas acquisition by Chinese companies this week.
A consortium of investors including China National Chemical Corp. on Sunday agreed to buy KraussMaffei Group for €925 million ($1 billion), one of the largest Chinese takeovers of a German company. Two days later, Chinese conglomerate Dalian Wanda Group Co. agreed to acquire production and finance company Legendary Entertainment for $3.5 billion in cash, the largest China-Hollywood deal to date.
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. The U.S. Justice Department had sued to block that transaction, saying the combination of the two companies would hurt competition for cooktops and ranges. Haier may face fewer antitrust hurdles than Electrolux because of its small presence in the U.S.
In seeking a fresh buyer, GE executives wanted a better deal than they had gotten from Electrolux, one person familiar with the matter said. GE also stands to receive a $175 million breakup fee from Electrolux.
The Chinese appliance maker outbid other foreign corporate bidders for the Louisville, Ky.-based business, according to a person close to the deal.
Haier has struggled to compete in the U.S. While it calls itself the biggest appliance maker in terms of unit sales, Haier is mainly known in the U.S. for products such as compact refrigerators and window air-conditioning units.
The privately held company has also been expanding its range of products and retail partners in the U.S. In August, Haier said it would invest $72 million to expand its 15-year-old refrigerator plant in Camden, S.C.
The GE transaction, however, will vault the Chinese company past Electrolux and other rivals in the U.S. market for white goods, which currently is led by Whirlpool Corp. Sales for the GE Appliances and Lighting division, of which appliances is the lion’s share, were $8.4 billion in 2014.
Haier held talks with GE in 2008 to buy the U.S. firm’s appliance unit. In 2010, a Haier executive said the company didn’t buy at the time because the price for the unit was too high. Haier also made an unsuccessful bid for Maytag in 2004, but lost out to Whirlpool.
Since then, Haier has been vying for more U.S. retail partners, tapping major advertising agencies in an effort to become a household name. Haier held a 29.8% market share of major household appliance sales in China last year, compared with 5.6% in the U.S., according to market research firm Euromonitor.
For Haier, which had $32.6 billion in revenue world-wide in 2014, growth overseas is critical. Profit margins from the company’s refrigerators and washing machines in China are razor-thin due to increased competition at home, where online shopping has sparked price wars, pushing down prices in the electronics and appliances sector.
Another drag on business is that fewer people in China are buying new homes and thus need fewer new appliances.
The deal will broaden Haier’s customer base and distribution channels. It could also sharpen its credibility in the U.S., where “Chinese brands are perceived as low quality,” said Klaus Meyer, a business professor at China Europe International Business School in Shanghai.
Based in China’s northeastern coastal city of Qingdao, Haier is one of China’s legacy state-owned enterprises. Haier’s chief executive, Zhang Ruimin, was the general manager when the company started in 1984 as a successor to a loss-making refrigerator factory that had been opened in 1949, when Chairman Mao Zedong founded modern China.
Mr. Zhang, now 67, is well known in business circles back home, building a no-nonsense reputation when, as newly appointed chairman in 1985, he smashed with a sledgehammer a faulty refrigerator to demonstrate zero tolerance for shoddy products at the factory.
Within his first decade as chairman, he transformed Haier, creating China’s largest appliance maker and becoming the first businessman appointed to China’s Central Committee, one of the Communist Party’s highest decision-making bodies.
Mr. Zhang built the brand by investing in a cartoon in the 1990s called the “Haier Brothers,” creating mascots that many in China recognized long after the airing of more than 200 episodes. Today, Haier has become one China’s most valuable brands, worth $1.9 billion in 2015, according to media agencies Millward Brown and WPP, which calculated the value using the company’s financial data and consumer-survey data.
GE Appliances will keep its headquarters in Louisville, Ky, the companies said.
Haier said in a statement to the Shanghai Stock Exchange that Qingdao Haier would be required to pay $200 million to $400 million to GE as compensation if the deal falls apart because to failure to obtain approvals from antitrust regulators, Chinese regulators or the company’s shareholders,
The GE assets that Haier agreed to acquire had a book value of $1.84 billion dollars as of the end of 2014.
—Ted Mann in New York and Rose Yu in Shanghai contributed to this article.
Write to Laurie Burkitt at laurie.burkitt@wsj.com, Joann S. Lublin at joann.lublin@wsj.com and Dana Mattioli at dana.mattioli@wsj.com
» utube MM&C 4/26/24 Iraqi Dinar - US Treasury Exchange Rates- Focus - Banking Partnerships - Rate C
» Parliamentary efforts to transform Iraq into a global market for transferring Internet capacities
» A parliamentary committee that enriches the political forces: Stop plundering Iraq’s wealth and work
» Politician: Salem Al-Issawi is the most likely to assume the presidency of Parliament
» The price of the dollar is close to 145 thousand dinars؛ how much is $100 worth of transactions؟
» Al-Sudani: The world today is witnessing crises whose impact has been reflected in the global econo
» The Federal Court responds to an inquiry by Al-Sudani regarding the powers of the provincial council
» Among them are the Iraqis... a list of the most sought-after immigrants to America
» An expert talks about the "biggest barrier" and the positives of merging Iraqi and Arab banks
» The House of Representatives adjourns its session
» Parliamentary demands to expedite the legislation of the Eid al-Ghadir holiday law (documents)
» Parliament adds the paragraph “Electing the Speaker of the House of Representatives” to its agenda
» Alsumaria publishes the text of the law against prostitution and homosexuality
» A parliamentarian reveals the reason for the failure of the Speaker of Parliament to pass during tod
» Al-Sudani: The government has launched many strategies and initiatives that will improve the reality
» International Business: Iraq has made progress in supporting businesses through investment and priva
» Association of Banks: Iraq is witnessing great development in the transition to electronic governmen
» The House of Representatives votes to add an item to its agenda (election of the Speaker of the Hous
» Parliamentary integrity: Combating corruption requires parliamentary legislation
» Al-Karaawi: America is trying to restrict Iraq
» The State of Law coalition moves to form the local government in Diyala
» The Sudanese and his battle against corruption.. Where is the fault with the government or with the
» Prime Minister's Advisor: We will see the dollar fall on the black market soon
» The Sunni blocs are resolute. The presidency of the Council is ours, away from Al-Halbousi
» Al-Sudani discusses with a workers’ organization his government’s steps in this field
» Parliament holds its session in the presence of 170 deputies
» In the presence of Nechirvan Barzani and Al-Sudani... the State Administration Coalition holds an “i
» The UAE company ADNOC resorts to Iraqi oil. Find out the reasons
» The Iraqi Parliament votes to add an item to elect a president to its agenda
» The Federal Court responds to an inquiry by Al-Sudani regarding the powers of the provincial council
» Al-Sudani: It is necessary to attract women to work as a productive energy that cannot be disrupted
» Zebari regarding targeting the Kormor field: a systematic attack on the economy of Kurdistan
» Saudi Arabia tops, and this is Iraq's rank... a list of major suppliers of crude oil to South Korea
» With a value of 125 million dollars.. Iraq is at the forefront of countries importing Iranian textil
» More than a billion dollars in sales from the Iraqi Central Bank within a week
» Al-Sudani stresses the need for the expertise of the International Labor Organization to legislate a
» Including the return of 21 wanted persons.. The Iraq Money Recovery Fund counts its achievements in
» The path to development is the criterion between true patriotism and political clowning.
» The file of the Presidency of Parliament is on the state administration table... this evening
» Director General of the International Labor Organization: Many challenges in the world of work and t
» Al-Sudani: The world is witnessing crises that reflect negatively on the Arab and international peop
» Prime Minister: Our government has provided great support for the success of the activities, program
» Al-Asadi: Iraq places the social protection file among its priorities
» Al-Sudani: Iraq is one of the first countries in the region to join the International Labor Organiza
» In the presence of Al-Sudani and Barzani, the State Administration Coalition holds an “important” me
» Appreciating the presence of Al-Sudani... Director General of the Arab Labor Organization: Here from
» Prime Minister: Our government has provided great support for the success of the activities, program
» Al-Sudani: The world is witnessing crises that reflect negatively on the Arab and international peop
» The Parliamentary Development Institute organizes a workshop on the political role of the representa
» With Arab and international participation. Tomorrow will be the start of the Fourth Baghdad Internat
» OPEC Secretary General: The end of oil is not on the horizon
» Closing a number of unlicensed offices and companies south of Baghdad
» Repercussions of the bombing...intensive government movements to resume work in the “Kormor” field
» In the presence of Al-Sudani...the opening of the Arab Labor Conference in its 50th session in Baghd
» Al-Sudani: We are working on drawing future visions regarding the “green and digital” economic secto
» Barzani after the Kormor attack: We are ready to coordinate with Baghdad to put an end to these atta
» Al-Sudani directs the formation of an investigative committee into the circumstances of the Kormo fi
» Bismayah is confused about the new electronic portal.. What about the landlord and the subcontracts?
» Kurdistan Government: Loss of 2,500 megawatts of electricity due to targeting the Kormor field
» Crisis in Kurdistan: 12-hour daily power outage and complaints of “confusion”
» The Supreme Anti-Corruption Commission demands Nineveh for the contracts concluded by “Najm Al-Jubou
» Al-Khanjar, Al-Samarrai, and Abu Mazen are hosted by Shaalan Al-Karim to discuss accelerating the se
» Iraq asks the countries of the world to respond to its requests to extradite wanted persons: We have
» “It is coming soon.” The Sudanese advisor sets the date for the referral of the Baghdad metro and th
» Al-Mubarqa: Iraq reserves its full right to respond to the Australian behavior
» Dollar exchange rates on Iraqi stock exchanges... recorded a decline, and this is the list
» Mr. Al-Sadr supports the position of American university students
» Iraqis are ranked 7th in the Arab world on the list of those most seeking immigration to America. He
» Soon.. 3 new hospitals will open in Baghdad
» Sponsored by Al-Sudani...the opening of the Arab Labor Conference in its fiftieth session in Baghdad
» Al-Shammari chairs a meeting at the controlling headquarters to review the results of the security o
» Arab Labor Organization: We commend Iraq's interest in the Arab Labor Conference
» Al-Sudani: The development road project will provide many job opportunities
» Sudanese advisor criticizes Kuwaiti analyzes regarding the development road project
» Al-Mandalawi stresses the need to strengthen economic and trade cooperation between Iraq and Poland
» Power maneuvers: America provides defensive weapons to Kurdistan in exchange for withholding from Ba
» Kuwait is drilling an oil well near Umm Qasr, towards Iraqi territory
» In the document... the first Iraqi ministry identifies the obstacles to changing the new official wo
» Italian Institute: Iraq is stuck in its own crises, including Baghdad’s efforts to undermine the “au
» The head of the Integrity Commission announces the holding of an international Interpol conference i
» Planning: Iraqi companies are not efficient in conducting the population census
» MM&C 4/25/24 National Bank of Iraq goes live with Temenos core banking and payments
» A banking official indicates a "danger" to Iraq by depriving more than half of its banks of dollars
» With the participation of the Association of Private Banks, investment opportunities are on the tabl
» Within a month... an Iranian border crossing recorded a noticeable increase in exports of goods to I
» The Association of Private Banks appreciates the efforts of the government and the Central Bank to c
» Al-Maliki's coalition presents a third candidate for the position of governor of Diyala
» Arab gathering: The Kirkuk problem is getting complicated and the Sudanese must intervene
» Next week.. a Kurdish delegation will visit Baghdad to meet with the Minister of Finance
» Under the pretext of salaries... Al-Party refrains from handing over port revenues to Baghdad
» Association of Banks: For the first time, we are witnessing a clear targeting of depriving half of t
» Parliament does not know the reason for the delay in sending the 2024 budget schedules: Voting takes
» Applicants for the 2024 Hajj are demanding that the Central Bank secure the dollar for them through
» Governmental and private banks will showcase their services tomorrow during Financial Inclusion Week
» Iraq's oil exports rise despite OPEC+ cuts
» A study explodes a "surprise"... Iraq is among the countries that export oil to "Israel": How is the
» Al-Araji emphasizes working to strengthen national identity
» Al-Sudani visits Saudi Arabia to participate in the World Economic Forum in Riyadh