Chinese appliance giant Haier has agreed a deal to acquire the appliance business of General Electric (GE) for $5.4 billion (£3.7bn).
The board of directors of both GE and Haier have approved the deal, but it still remains subject to customary regulatory procedures in China. The transaction also has to be approved by two-thirds of Haier shareholders.
The deal is expected to close by mid-2016.
Said GE chairman and chief executive Jeff Immelt (pictured): “We are pleased to be selling our appliances business to Haier, which is committed to growing the business globally. Haier has a stated focus to grow in the US, build their manufacturing presence here, and to invest further in the business. Innovation, new product introduction and brand management are fundamental to their overall strategy. GE Appliances provides Haier with great products, state-of-the-art manufacturing facilities and a talented team. In addition, we see the opportunity to work together to build the GE brand in China.”
GE previously walked away from an acquisition deal with Electrolux worth $3.3bn because of opposition from US antitrust regulators, who ruled that it “was bad for the millions of consumers who buy cooking appliances every year”.
As part of the deal with Haier, GE Appliances will continue to market its current portfolio of GE brands for a 40-year period and the company’s headquarters will remain in Louisville, Kentucky.
In 2014, GE Appliances reported revenue of around $5.9bn (£4.1bn) and $400 million in pre-tax profits.
GE and Haier also agreed to cooperate globally to grow their presence in areas such as industrial internet, healthcare and advanced manufacturing. A GE statement also said it had agreed to help Haier enhance the efficiency of its manufacturing plants.
Zhang Ruimin, chairman and chief executive of Haier Group, said: “This strategic alliance provides a new starting point for both Haier and GE and I am confident that this partnership will deliver enhanced value to the stakeholders of both companies. Furthermore, we share common goals that we hope to achieve together – enhancing the value of the Haier and GE brands and developing our employees by encouraging autonomous innovation and cooperation.”
Liang Haishan, chairman of Qingdao Haier Co Ltd – the Shanghai stock exchange listed company that owns 41% of Haier – commented: “Qingdao Haier and GE Appliances are leading appliance businesses in the eastern and western hemispheres. The alliance of both parties will lead to a great deal of mutual benefit. Qingdao Haier and GE Appliances are highly complementary businesses, particularly in the areas of brand, market, product innovation, and supply chain and quality management. This coming together will further enhance both the Haier and GE brands.”
He added: “GE Appliances’ highly experienced and successful management team will continue to guide the direction of the business and will be involved in the governing board. In addition, Qingdao Haier will provide support and employee development opportunities within our global operating platform.”