May 28 (Bloomberg) -- LG Electronics Inc. and China's Haier Group Corp. are among potential suitors that may acquire General Electric Co.'s century-old appliances division, said Jeffrey Immelt, chief executive officer of the U.S. company.
``The players become very obvious,'' Immelt said during a breakfast meeting with businessmen in Seoul today. ``It's Haier in China, LG in Korea and so on. Of course, LG is one of the leading candidates.''
Buying GE's unit would help Seoul-based LG Electronics challenge Whirlpool Corp.'s lead in the production of appliances worldwide, while a purchase by Haier would give the Chinese company a household name to help drive its U.S. expansion. GE said this month it may sell the unit amid calls for the company to speed up divestitures of slower-growing operations.
``Both LG and Haier need GE to break into the U.S. market because it has a very strong brand,'' Castor Pang, an analyst at Sun Hung Kai Securities in Hong Kong, said. ``Buying GE would be a big advertisement for them. After all, the U.S. market is still a very big market.''
GE's appliances division may fetch as much as $8 billion, according to estimates by analysts at Citigroup Inc. and Goldman Sachs Group Inc.
LG is ``carefully monitoring'' the sale of GE's appliances division, Chief Executive Officer Nam Yong said yesterday, declining to comment whether LG would bid. The Korea Exchange asked LG Electronics to clarify by today whether the company is interested in bidding.
Na Joo Young, a spokeswoman for LG, declined to elaborate on Nam's comments. Zhao Rui, a spokeswoman at Haier, declined to comment.
Long Process
Immelt said today the sale of the appliances unit ``will be a long process.'' Other potential bidders mentioned by Immelt included Mexico's Controladora Mabe SA and Turkey's Arcelik A.S.
There have been ``lots of inquiries'' about the appliances unit, mostly from outside the U.S., and GE is also considering a spinoff, Immelt said this month. ``We within GE agree that every business has to have a global footprint,'' he said today.
GE's appliances business had 27 percent of the U.S. market in 2006, the latest available data, according to Stephen Tusa, an analyst at JPMorgan Chase & Co. The unit had revenue of $7.2 billion in 2007, according to Credit Suisse Group estimates.
LG, Haier Sales
LG Electronics posted sales of 11.8 trillion won ($11.3 billion), including those of overseas affiliates, in 2007 from appliances. The North American market accounted for 29 percent of the division's first-quarter sales.
China's Economic Observer reported on May 24 that Haier is considering buying the GE unit and has held talks with China Development Bank on financing a bid. Still, the Qingdao, China- based company hasn't contacted GE yet, the newspaper said, citing an unidentified Haier official.
Haier, China's largest maker of home appliances, is the parent of Hong Kong-listed Haier Electronics Group Co. and Shanghai-listed Qingdao Haier Co. In 2005, the company, which sells products in the U.S. through retailers such as Wal-Mart Stores Inc. and Home Depot Inc., pulled out of a $1.28 billion bid for U.S. appliance maker Maytag Corp.
Haier Electronics will have sales of about HK$10.6 billion ($1.4 billion) in 2008, UBS AG analysts Randy Zhou and Erica Poon Werkun said in January. Qingdao Haier, which sells refrigerators and freezers, will have sales of 33.5 billion yuan ($4.8 billion) this year, according to UBS.
Refrigerators, Appliances
LG Electronics shares fell 0.7 percent to 138,000 won at 12:27 p.m. in Seoul. Haier Electronics was unchanged at HK$1.2 in Hong Kong trading, while Qingdao Haier gained 0.8 percent to 12.07 yuan in Shanghai.
Sales of washers, refrigerators and other appliances accounted for more than half of last year's $13.3 billion in sales at GE Consumer & Industrial. GE had total revenue of $172.7 billion last year. More than half of the company's sales come from overseas, while the appliances division is tied to a single market, primarily in the U.S.
Other potential bidders mentioned in analyst reports earlier included South Korea's Samsung Group and Stockholm-based Electrolux AB, the maker of Frigidaire appliances.
Videocon Industries Ltd., India's largest consumer electronics maker, is studying the viability of a bid for the appliances division, Venugopal N. Dhoot, chairman of the Aurangabad-based company, said May 23.
To contact the reporter on this story: Kyunghee Park in Seoul at kpark3@bloomberg.net
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