A month after abandoning a deal with Sweden's Electrolux, General Electric Co agreed to sell its century-old appliance business to China's Qingdao Haier Co Ltd for $5.4 billion in cash.
After months of opposition from U.S. antitrust regulators, the $3.3 billion-proposed deal with Electrolux had fallen through.
GE said that the deal valued the business at 10 times earnings before interest, taxes, depreciation, and amortization (EBITDA) in the last 12 months. From Haiers’ perspective, it would boost the presence of the company in the United States.
a person authorized to speak on behalf of Qingdao Haier said that customary regulatory filings in China and antitrust approvals in the United States, Mexico and Argentina have to be cleared before the deal – tipped to be the highest ever by Haier could be implemented.
KKR and Haier Group, who jointly own 50.8 percent of the company are the primary shareholders of Qingdao Haier and the deal needs to be approved by them as well as other, the source said.
The companies confirmed that along with its current management team, Haier will continue to use the GE Appliances brand and retain its headquarters in Louisville, Kentucky.
Haier said that GE Appliances' 48.4 percent stake in Mabe, a Mexican appliance company that has operated a joint venture and has had a sourcing relationship with GE Appliances for 28 years is also included in the transaction.
"We expect the (deal) confirmation to increase concerns on the dynamics in the U.S. appliances industry," Morgan Stanley analyst Lucie Carrier wrote in a note to clients.
The acquisition would be complementary to its existing range of products and operations since Haier has limited presence in the United States, the source added.
"The GE acquisition will give the white goods maker better sales channels in the U.S. and a better relationship with retailers. You also have the potential over time to create cost synergies from such things as sourcing and shifting manufacturing," said David Cogman, a Hong Kong-based partner with McKinsey.
A gain of 20 cents per share upon closing as expected by GE after the deal is through would be generated which would however by offset by restructuring in 2016.
In 2014, GE Appliances had about $5.9 billion in revenue and $400 million in EBITDA. The company employs about 12,000 workers globally, 96 percent of whom are based in the United States. Goldman Sachs was GE's finiancial adviser and Sidley Austin LLP was its legal adviser.
The deal with GE would catapult the Chinese company past Electrolux and other rivals in the U.S. market for white goods, which is currently led by Whirlpool. GE Appliances and Lighting sales, with GE Appliances having the lion’s share, were $8.4 billion in 2014.
With an effort to buy the U.S. firm’s appliance unit, Haier held talks with GE in 2008. The company didn’t buy at the time because the price for the unit was too high, a Haier executive had said in 2010. Haier also made an unsuccessful bid for Maytag Corp. in 2004, but lost out to Whirlpool
(Source:www.reuters.com)
After months of opposition from U.S. antitrust regulators, the $3.3 billion-proposed deal with Electrolux had fallen through.
GE said that the deal valued the business at 10 times earnings before interest, taxes, depreciation, and amortization (EBITDA) in the last 12 months. From Haiers’ perspective, it would boost the presence of the company in the United States.
a person authorized to speak on behalf of Qingdao Haier said that customary regulatory filings in China and antitrust approvals in the United States, Mexico and Argentina have to be cleared before the deal – tipped to be the highest ever by Haier could be implemented.
KKR and Haier Group, who jointly own 50.8 percent of the company are the primary shareholders of Qingdao Haier and the deal needs to be approved by them as well as other, the source said.
The companies confirmed that along with its current management team, Haier will continue to use the GE Appliances brand and retain its headquarters in Louisville, Kentucky.
Haier said that GE Appliances' 48.4 percent stake in Mabe, a Mexican appliance company that has operated a joint venture and has had a sourcing relationship with GE Appliances for 28 years is also included in the transaction.
"We expect the (deal) confirmation to increase concerns on the dynamics in the U.S. appliances industry," Morgan Stanley analyst Lucie Carrier wrote in a note to clients.
The acquisition would be complementary to its existing range of products and operations since Haier has limited presence in the United States, the source added.
"The GE acquisition will give the white goods maker better sales channels in the U.S. and a better relationship with retailers. You also have the potential over time to create cost synergies from such things as sourcing and shifting manufacturing," said David Cogman, a Hong Kong-based partner with McKinsey.
A gain of 20 cents per share upon closing as expected by GE after the deal is through would be generated which would however by offset by restructuring in 2016.
In 2014, GE Appliances had about $5.9 billion in revenue and $400 million in EBITDA. The company employs about 12,000 workers globally, 96 percent of whom are based in the United States. Goldman Sachs was GE's finiancial adviser and Sidley Austin LLP was its legal adviser.
The deal with GE would catapult the Chinese company past Electrolux and other rivals in the U.S. market for white goods, which is currently led by Whirlpool. GE Appliances and Lighting sales, with GE Appliances having the lion’s share, were $8.4 billion in 2014.
With an effort to buy the U.S. firm’s appliance unit, Haier held talks with GE in 2008. The company didn’t buy at the time because the price for the unit was too high, a Haier executive had said in 2010. Haier also made an unsuccessful bid for Maytag Corp. in 2004, but lost out to Whirlpool
(Source:www.reuters.com)
