China’s Haier Group (海爾) has agreed to buy General Electric Co’s (GE) appliance business for US$5.4 billion in what would be the nation’s biggest acquisition of an overseas electronics company.
The group’s Qingdao Haier Co (青島海爾) signed an agreement with GE and the transaction is targeted to close in the middle of this year, a statement said.
While the boards of GE and Haier have approved the deal, it is still subject to shareholder and regulatory approval, it said.
Buying a century-old business that makes US$8,500 refrigerators from the likes of GE would underscore the rise of a Chinese company once known for making cheap fridges for college dormitories.
It also highlights Haier’s global ambitions, as the acquisition would help the company expand in the US, one the markets it is trying to focus on besides Europe and Japan.
“It may be a step for the Chinese company to build up an international network, while its overseas exposure now is still small,” Andrew Song (宋濤), an analyst in Guotai Junan Securities Co (國泰君安證券), said before the announcement. “It’s also likely that they will have more synergy, as Haier is developing smart appliances.”
If completed, the size of the deal would make it the largest Chinese purchase of an electronics business overseas, surpassing state-backed Tsinghua Holdings Co’s (清華控股) plans for a US$3.8 billion investment in Western Digital Corp announced last year and Lenovo Group Ltd’s (聯想) US$2.8 billion acquisition of Motorola Mobility Group in 2014, according to data compiled by Bloomberg.
GE was seeking another suitor for the unit after an agreement with Electrolux AB collapsed following opposition from the US Department of Justice. The business drew offers from suitors that included China’s Midea Group Co (美的集團), according to people with knowledge of the matter.
The sale is part of GE chief executive Jeffrey Immelt’s efforts to reshape the company around industrial-manufacturing operations. Besides the appliance business, he is selling the bulk of GE’s lending arm, while expanding divisions making products such as gas turbines, oilfield equipment and jet engines.
Midea is China’s biggest manufacturer of appliances, with a 17.1 percent share of the nation’s market last year, followed by Qingdao Haier, with 7.9 percent, Euromonitor International data showed.
Haier had a 1.1 percent share of the US appliance market last year, according to Euromonitor.
GE and Haier also announced yesterday that they would cooperate in industrial Internet, healthcare and advanced manufacturing. Both companies also plan to work together to develop and grow affordable consumer health initiatives in China, the statement said.
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