GE Restarts Auction for Appliance Business

NEW YORK (The Deal) -- Five years after a failed attempt to sell its appliance unit, both General Electric (GE) and a suitor each confirmed Thursday that the company is trying again to shed the massive operation.

Sweden's Electrolux on Thursday said that it is in discussions with Fairfield, Conn.-based GE about the conglomerate's appliance business, adding that no agreement has been reached. A GE spokesperson, meanwhile, said that the company "is reviewing strategic options for GE Appliances and is in talks with Electrolux and other parties," but provided no further details.

Analysts have estimated the Louisville, Ky.-based GE Appliance business could be worth upwards of $2.5 billion in an auction.

While no other bidders for the business have publicly come forward, reports have also said a partnership between New York-based consumer product firm Quirky and private equity giant Blackstone Group (BX) is also working on a bid, and analysts say other private equity firms could join the fray.

Quirky earlier this year announced an agreement with GE to work on an app that would control smart devices, including appliances.


GE in 2008 hired Goldman Sachs (GS) to shop its appliance business. Despite reportedly attracting some interest from suitors including LG Electronics, China's Haier Group, Arcelik of Turkey and Controladora Mabe of Mexico, GE was unable to complete a deal amid the period's economic turmoil.

The company in recent years has turned its attention towards higher-margin businesses, including in energy and healthcare, and was long expected to eventually try again to sell the appliance unit. A sale now would help GE recoup part of the €11.4 billion ($15.5 billion) price it agreed in June to pay for the power unit of France's Alstom.

The GE appliance business generates about $8 billion in annual sales, or about 5.6% of total company revenue, but has experienced slow growth and low profit margins. The unit was responsible for less than 2% of General Electric's overall profit last year, and ranks as an increasingly insignificant portion of the conglomerate's nearly $150 billion in annual sales.

GE earlier said it could sell up to $4 billion worth of non-financial businesses this year in addition to financial services divestitures. In July, the company spun off the North American consumer lending operations of its GE Capital operation to shareholders.

A deal with Electrolux could be complicated by potential antitrust concerns. A combination of Electrolux and GE Appliance would bring together the second- and third-largest U.S. vendors, respectively, and would rival market leader Whirlpool  (WHR).

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