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Chinese Haier to Buy GE Appliances Unit for US$5.4 Billion

China’s Haier Group has struck a US$5.4 billion (C$6.4 billion) cash deal to purchase General Electric (GE)’s appliances business, according to a release by GE. Antitrust regulators in the U.S. had just weeks ago opposed a US$3.3 billion deal to sell GE Appliances to Sweden’s Electrolux, but the Haier deal’s announced target to close is set for mid-2016. With its purchase, Haier will also receive GE Appliances’ 48.4% stake in Mexico’s Mabe appliance company, a GE Appliances joint venture for 28 years. Haier, operating in 100 countries and employing 72,000 people, had global revenues of US$32.6 billion in 2014. Haier operates 21 industrial parks worldwide, and owns 41% of Qingdao Haier Co. Ltd., the unit carrying out the GE acquisition. Since 1984, Haier has been managed by Zhang Ruimin, now chairman of Haier Group.

The US$7.1 billion purchase of 50% of Sanyo Electric Co. by Panasonic Corp. in 2008 is the only household appliance deal larger than the Haier-GE deal. With the US$1 billion purchase of German manufacturer KraussMaffei by ChemChina and the US$3.5 billion purchase of Hollywood’s Legendary Entertainment by China’s Wanda Group on January 11 and 12 respectively, the past week has seen multiple incidences of Chinese firms making large, diversification-oriented deals.

GE itself has made large deals in China recently, including a contract, announced December 24, to supply equipment for a 10.2-GW hydropower project in China in a US$15.5 billion deal. Another GE deal in China, announced January 7, is for a 1-GW wind turbine contract for what is set to be one of China’s largest offshore wind farms. Revenue for GE Appliances in 2014 was US$5.9 billion, and its United States-based employees make up 96% of the 12,000 people it employs. Given this level of employment and GE’s brand visibility within the U.S. (GE has existed since 1892), Haier has in turn increased its own visibility in the country.

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