On Friday, General Electric Company (NYSE: GE) announced that it will sell its appliance unit for $5.4 billion in cash to Chinese manufacturer Qingdao Haier Co., Ltd. (SHA: 600690). These two companies will cooperate world-wide to expand their reach in advanced manufacturing, health care and the industrial sectors.
The deal will help Haier sell fridges, washers and other appliances that are already popular in China overseas after struggling to gain a robust foothold in the U.S. and elsewhere for years. Haier stated it will have the 40-year rights to use the GE brand for appliances. This acquisition also enables GE to focus on its industrial business instead of washer or even finance.
Mr. Zhang Ruimin, Chairman and CEO of Haier Group, commented: "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. Further, 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."
Mr. Jeff Immelt, CEO of GE, commented: "We are pleased to be selling our Appliances business to Haier and to launch this new partnership. Haier has a stated focus to grow in the U.S., 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 Appliances is headquartered in Louisville, Kentucky and is a famous home appliances company in North America. The company own nine manufacturing plants across 5 states in the U.S. and has built world-class logistics, distribution capabilities and strong customer relationships in both the contract channels and retail. GE Appliances had almost $5.9 billion in revenue and $0.4 billion in EBITDA in 2014.
The buyout of GE Appliances is an important investment to expanding Haier's presence in the U.S. GE Appliances will remain headquartered in Louisville, Kentucky, and keeping operated independently under the direction of a local board with the participation of GE's current senior management team, who will guide the strategy and operations of the business. Haier is promised to investing in the continued growth of the U.S. business.
According to GE’s announcement, this acquisition will create big value not only for the companies’ communities but also for customers, employees, shareholders, and business partners. Particularly, this acquisition will provide GE Appliances the chance to enter the China market and position the company for further international growth. Moreover, this transaction will offer increased opportunities for all employees by creating larger global company.