Haier Group has agreed to buy the General Electric (GE) appliances business for $5.4bn in a deal which would be one of the largest acquisitions by a Chinese company of a US firm, and the largest by an overseas electronics business.
Haier, the world’s biggest home appliance maker is seeking to establish itself as a global brand, a company goal that will be helped by making such an important acquisition of GE Appliances.
The acquisition will help Haier Group expand its business into the US and change its image from a maker of cheaper products into a premium brand.
The Haier Group’s Qingdao Haier Co. signed the $5.4bn agreement with GE with the transaction targeted to close in mid-2016.
While the boards of Haier and GE have approved the deal, it’s still subject to shareholder and regulatory approval.
Haier’s purchase of GE Appliances is the biggest global corporate acquisition so far this year.
GE Appliances reported $5.9bn in revenue in 2014 and has 12,000 employees.
GE chairman and CEO Jeff Immelt said that Haier Group was “committed to growing the business globally,” and called the agreement “a good deal which will benefit our investors, customers and employees.”
“Haier has a stated focus to grow in the US, build their manufacturing presence here and to invest further in the business,” he said.
“In addition, we see the opportunity to work together to build the GE brand in China.”
The sale of GE Appliances is part of the GE CEO’s efforts to reshape the company around industrial-manufacturing operations.
Haier Group chairman and CEO Zhang Ruimin said the deal was a new beginning for both companies.
“This strategic alliance provides a new starting point for both Haier and GE and I am confident that this partnership will deliver enhanced value to the stakeholders of both companies,” he said.
Haier Group and GE also announced that as well as the acquisition of GE Appliances, the two companies will cooperate in a strategic partnership focusing on industrial internet, healthcare and advanced manufacturing, as well as helping to grow and develop affordable consumer health initiatives in China.
Prior to its sale, GE had been due to sell its appliances unit to Swedish company Electrolux for $3.3bn, before the proposed deal ran into opposition from US competition authorities.
Haier Group said in statement to the Shanghai Stock Exchange that the GE deal would boost the company’s ambitions of becoming a global brand by tailoring its products to the needs of the world’s consumers.
“The deal will create more diversified and better quality home appliance products for world consumers that better suit their needs,” it said.
Haier Group’s purchase of GE Appliances is the latest in a string of multibillion dollar acquisitions by Chinese companies since the beginning of the year.
Conglomerate Wanda Group announced it was buying Hollywood’s Legendary Entertainment for $3.5bn, while state-owned chemical company China National Chemical Corporation announced it was buying German industrial machinery maker KraussMaffei Group for $1bn.