General Electric has said it will sell its appliance business to China’s Haier Group for $5.4 (£3.77) billion in cash, furthering the goal of selling its non-core assets and project itself as a technology company.
The deal comes weeks after GE walked away from a deal to sell the business to Sweden’s Electrolux for $3.3 billion, following opposition from US antitrust regulators.
GE said the deal values the appliance business at 10 times last 12 months earnings before interest, taxes, depreciation, and amortisation (EBITDA).
GE shares fell 2.3% in premarket trading.
GE said earlier this week it would shift its headquarters to Boston, a move aimed at lowering its tax bill and tapping talent in city that is fast becoming a technology hub.
For Haier, the deal means ownership of a century-old appliance business that makes refrigerators, freezers, washing machines and tumble dryers across brands such as Monogram, Café, Profile and Artistry. The business trails only Whirlpool in the U.S. white goods market and reported revenue of $5.9 billion last year.
The deal, Haier’s biggest ever, will give a massive boost to its US business, which held less than 5% of the market last year.
Haier, as is the case in Europe, been mostly present in the highly competitive, so-called “value segment” of the market and analysts expressed concern about the impact its bigger presence would have on the pricing dynamics.
“Even if Haier doesn’t have a history of dumping prices in the United States, as for example LG and Samsung has, this is still an unknown player, a Chinese player,” DNB Bank ASA analyst Christer Magnergard wrote in a broker note.
“Haier may have a somewhat different agenda than just having high profitability in the United States in 2016.”
Haier said the transaction includes GE Appliances’ 48.4% stake in Mabe, a Mexican appliance company that has a joint venture and a sourcing relationship with the business for 28 years.
The deal will be subject to customary regulatory filings in China and antitrust approvals in the United States, Mexico and Argentina, said a person authorised to speak on behalf of Qingdao Haier Co Ltd, the Haier unit making the purchase.
The deal is also to be approved by shareholders of Qingdao Haier as well as KKR and Haier Group, who jointly own 50.8% of the company, the person said.
Haier will continue to use the GE Appliances brand and retain the business’s headquarters in Louisville, Kentucky and its current management team, the companies said.
