GE to sell appliances business to China's Haier for $5.4 billion

Fri Jan 15, 2016 3:07pm EST
 
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By Ankit Ajmera

(Reuters) - Haier Group said it would buy General Electric Co's appliance business for $5.4 billion, the Chinese company's latest attempt to boost its presence in the lucrative United States market.

Haier, which made an abortive attempt in 2008 to buy the business, has a negligible presence in the U.S. white goods market, dominated by Whirlpool Corp, Sweden's Electrolux AB and GE.

The news comes weeks after GE walked away from a deal to sell the business to Electrolux for $3.3 billion, following months of opposition from U.S. antitrust regulators.

The deal with Haier is unlikely to draw intense antitrust scrutiny, according to some antitrust experts, but may get a hard look from the Committee on Foreign Investment in the United States (CFIUS).

"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 said the deal values the appliance business at 10 times last 12 months earnings before interest, taxes, depreciation, and amortization (EBITDA). Whirlpool Corp is valued at 7.7 times.

"This is the chance of a life-time for Haier to become big outside China and specifically US, hence they are willing to pay this very high price tag," Kepler Cheuvreux analyst Johan Eliason told Reuters.

The deal will give Haier ownership of a century-old business that makes refrigerators, freezers, clothes washers and dryers under brands such as Monogram, Café, Profile and Artistry. The business reported revenue of $5.9 billion last year.   Continued...

 
General Electric appliances are on display for sale at an appliance store in Westminster, Colorado January 15, 2016.  REUTERS/Rick Wilking