Haier Deals With GE On Purchasing Electrical Appliance Business To Find Momentum In The US Market
General Electric Co. is believed to sign a deal on selling its appliance business to China's Haier Group for $4 billion. The electrical equipments maker has been conducting an auction for the sale of the century old appliance business. Both the companies have announced for reaching to an agreement on Friday.
The new deal is about to struck following GE's earlier bid to sale the business to Sweden's Electrolux AB, has been forced to abandon. The US Department of Justice has sued to block the transaction with accusations for hurting competitions for cook tops and ranges, reports The Wall Street Journal.
Haier, headquartered in the eastern Chinese city of Qingdao, is the world's largest appliance maker which has posted $32.6 billion sales revenue during 2014. However, GE aims to sale its appliance unit in a bid to shift its focus to higher-technology and higher-profit areas such as medical equipment, reports U.S. News.
The Chinese appliance maker outbids other foreign corporate bidders for purchasing the Louisville, Kentucky based business. Final negotiations are being continued and signing of the deal may differ a little. GE has declined to make further comments while Haier remains nonresponsive to a request for comment, reports Market Watch.
GE has earlier told investors that demand for the appliance business remains strong. And hence It expects to move quickly to find a new buyer. In seeking a fresh buyer, Company executives have been searching for "a better deal" compared to that received from Electrolux. GE also appears eligible to claim for a $175 million breakup fee from Electrolux.
The electronics conglomerate is pulling out from one of its legacy business lines ahead of a companywide reorientation by Chief Executive Jeff Immelt. He intends to focus on its high-tech, high value products like power turbines, jet engines and oil-and-gas production equipments. Earlier this week, GE has announced relocating its headquarters from Fairfield, Connecticut to Boston.
GE has been trying to sell the unit prior to initiation of the global financial crisis but forced to keep hold until markets turned to normalcy. Meanwhile, Haier has been reported to struggle to gain more than a small foothold in the U.S.
The Chinese appliance maker refers itself as the biggest appliance maker in terms of unit sales. But Haier is mainly known in the U.S. for compact refrigerators and window air-conditioning units. Inheriting the image of GE, Haier is eyeing to increase its potential in the US market.
General Electric Co. has been looking for a potential buyer for selling its century old business and finally finds Haier as the new contender surpassing Electrolux. GE aims to enter high-tech arena disposing off electrical appliance unit. However, Haier aims to strengthen its presence in the electrical appliance market of the US through acquiring the GE concern.