GE Appliance Business Bidders

15 years ago

Looks like the GE CEO is trying to drum up business / bidders . Note none of these have made a bid or officially expressed interest - its just who GE is thinking will

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Reuters

GE CEO cites five potential bidders for appliances

Wednesday May 28, 12:29 pm ET

By Marie-France Han and Kirby Chien

SEOUL/BEIJING (Reuters) - General Electric Co (NYSE:GE - News) Chief Executive Jeff Immelt on Wednesday named five non-U.S. appliance manufacturers, including China's Haier, South Korea's LG Electronics, Sweden's Electrolux, Mexico's Controladora Mabe and Turkey's Arcelik, as potential bidders for the company's century-old appliances business.

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The chief of the second-largest U.S. company by market capitalization said it was "obvious" who would be interested in the unit, which last year sold $7.2 billion worth of refrigerators, washing machines and other household appliances.

"The players have become somewhat obvious," Immelt told reporters in South Korea. "It is Haier in China, it is LG in Korea, it's Mabe in Mexico, it's Arcelik in Turkey."

In Beijing, he added another name to the list of suspects: "Whether LG or Haier or Electrolux or others participate remains to be seen."

None of those companies confirmed their interest.

After stunning investors in April with an unexpected drop in quarterly profit, GE said this month it would look to sell or spin off its appliances unit, saying the business was too focused on the United States.

Analysts and investors have estimated the business, which is No. 2 in the U.S. behind Whirlpool Corp (NYSE:WHR - News), could sell for $4 billion to $8 billion. Whirlpool is the world's largest appliance maker.

Immelt's comments could be an effort to see if there are other interested bidders who have not yet made themselves known to the company, said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors, which manages $6.5 billion in assets and holds GE shares.

"I wonder if he's not tapping tree trunks with a stick trying to figure out if there's bees in there," Sorrentino said.

STILL 'EARLY ON'

Immelt's remarks came just a week after he told investors GE that the company was "seriously" considering spinning off the appliances unit.

"The appliance process is still very early on, and much still has to be decided," Immelt said in Beijing on Wednesday.

GE's well-known brand name could appeal to a foreign appliance manufacturer looking to build its profile in the United States while capitalizing on lower-cost production.

LG (066570.KS) said in a statement to the Korea Stock Exchange that it had not yet decided whether to bid for the GE unit.

A spokesman for Electrolux (Stockholm:ELUXB.ST - News), the world's No. 2 home appliances maker, declined to comment, as did a spokeswoman for Arcelik (Istanbul:ARCLK.IS - News), Turkey's leading appliance maker.

Sources have described Haier as interested, but the company has declined official comment.

LG A 'LEADING' CANDIDATE

Immelt said LG was "clearly one of the leading candidates."

"They are a great company. They already have a presence in the U.S. Strategically, there are many things to be admired about a combination of LG and GE Appliances," he said.

Analysts queried what LG would get from buying the appliance unit, as its brand is already known in the United States.

Goodmorning Shinhan Securities analyst Steve Lee said, "I doubt LG Elec would be interested in pursuing this deal, since there's little the company can gain. There's a lot of overlap between the businesses with little premium potential for LG."

Lee said Immelt's comments could be aimed at drumming up interest from a small pool of potential candidates with deep-enough pockets to buy the business.

South Korea's Samsung Electronics Co Ltd (005930.KS) and Italy's Indesit Co SpA (Milan:IND.MI - News) also have been touted as possible bidders, but neither has confirmed an interest.

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All I can think of is the episodes of 30 Rock and how they lampooned how GE owns both NBC and an appliances division: Jack: Attention, creative types. Brainstorming session. Lutz, try to stop mouth breathing for one minute. Uh, what is this? It's an idea. An idea that started this company, changed the way we live, and made this country great. This is Dinesh Mehta. He's a design engineer for the Microwave Division. All Dinesh and I need from you is one idea that is as good as the light bulb. Liz: what? Jack: I have two days to make people buy a lot of microwaves. Frank: well, it's kind of annoying when you're microwaving, like, a burrito and the burrito won't rotate because it's too big. It just gets, you know, caught against the sides and the the tray under it rotates, but it, it doesn't rotate. Jack: Okay, bigger ovens. Americans like big, yes. what else? Toofer: what if microwaves broke down more easily so people would have to buy new ones more often? Jack: Yes, shoddier, excellent. Bigger and not as well-made. Pete: wow, that sounds exactly like the philosophy that almost destroyed the U.S. auto industry. Jack: This isn't the auto industry, Pete. The auto industry was run by a bunch of out-of-touch white guys selling consumers a product they didn't want. we're G.E., damn it. And we're going to make a giant, flimsy microwave. Dinesh: Frank, I can't! If I make it any bigger, the door will be too heavy. Frank: Fine, forget it. Jack: wait... Say that again. Frank: I said, ''Forget it.'' Jack: ''Four, get it.'' Four smaller doors. Toofer: Yes! we'll crack this yet. Jack: ''wheel crack this yet.'' wheel. Put wheels on it. Frank: Yeah!
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GE Appliance Business Bidders

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