By Renée Francoeur
January 18, 2016 – GE says it has signed a definitive agreement to sell its Appliances business to Qingdao Haier Co. for $5.4 billion. The transaction has been approved by the board of directors at GE and Haier, and remains subject to customary closing conditions, including Haier shareholder approval, and regulatory approvals. GE says the deal is targeted to close in mid-2016.
“We are pleased to be selling our Appliances business to Haier, which is committed to growing the business globally,” said GE chairman and CEO Jeff Immelt. “GE Appliances is performing well and there was significant interest from potential buyers, helping drive a good deal, which will benefit our investors, customers and employees.”
The transaction values GE Appliances at 10 times the last 12 months of earnings before interest, taxes, depreciation, and amortization, GE says, and the sale will generate an after-tax gain of approximately $0.20 per share at closing. As part of the transaction, GE has entered into a long-term agreement with Haier to continue use of the GE Appliances brand. Louisville, Ky. will remain the brand’s headquarters.
GE and Haier also announced a long-term strategic partnership to explore co-operation in the areas of industrial internet, healthcare, and advanced manufacturing. GE says it will help Haier enhance the efficiency of its manufacturing plants, while Haier will help implement GE’s Predix platform. Both companies will work together on opportunities to develop and grow affordable consumer health initiatives in China, GE adds.
The company had previously announced a plan to sell Appliances to Electrolux for $3.3 billion in September 2014 but the deal was never finalized.