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Haier Group Enters into MoU for Global Strategic Partnership with General Electric
Qingdao Haier Will Acquire GE Appliances Business
Haier Group (“Haier”) and General Electric (NYSE: GE; “GE”), today announced a Memorandum of Understanding (“MoU”) to cooperate globally and jointly pursue growth projects in focus areas where both companies can increase business competitiveness such as Industrial Internet, healthcare, and advanced manufacturing. This strategic cooperation framework agreement brings together two highly complementary world-class enterprises and establishes a model for cross-border investment and cooperation between China and the United States.
In addition, Qingdao Haier Co., Ltd. (SHA: 600690; “Qingdao Haier”), a Shanghai stock exchange listed company that is 41% owned by Haier, will acquire the GE Appliances business (“GE Appliances”). Qingdao Haier acquired all overseas operations of Haier Group in June 2015, as part of the expansion of Haier’s global business. The coming together of Qingdao Haier and GE Appliances will further enhance Qingdao Haier’s global competitiveness. GE Appliances has more than 100 years of brand heritage, a loyal mid- to high-end customer base, a highly experienced and accomplished management team, a distinctive corporate culture, a strong white goods portfolio, an extensive self-owned logistics and distribution network in the North American market, and an established quality control system.
Mr. Zhang Ruimin, Chairman and CEO of Haier Group, commented: “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. Further, we share common goals that we hope to achieve together: enhancing the value of the Haier and GE brands and developing our employees by encouraging autonomous innovation and cooperation.”
Mr. Jeff Immelt, CEO of GE, commented: “We are pleased to be selling our Appliances business to Haier and to launch this new partnership. Haier has a stated focus to grow in the U.S., build their manufacturing presence here, and to invest further in the business. Innovation, new product introduction, and brand management are fundamental to their overall strategy. GE Appliances provides Haier with great products, state-of-the-art manufacturing facilities, and a talented team. In addition, we see the opportunity to work together to build the GE brand in China.”
GE Appliances is headquartered in Louisville, Kentucky and is a leading home appliances company in North America. The business has nine manufacturing plants across five states in the U.S. and has built world-class logistics and distribution capabilities as well as strong customer relationships in both the retail and contract channels. In 2014, GE Appliances had approximately US$5.9 billion in revenue and $0.4 billion in EBITDA. The company employs approximately 12,000 employees globally, 96% of whom are based in the United States.
The acquisition of GE Appliances is an important investment in expanding Haier’s presence in the U.S. and in the Western hemisphere. GE Appliances will remain headquartered in Louisville, Kentucky. The business will continue to be operated independently under the direction of a local board with the participation of GE’s current senior management team, who will guide the strategy and operations of the business. Haier is committed to investing in the continued growth of the U.S. business.
This transaction will create immediate and long-term value not only for the communities in which both companies operate, but also for employees, customers, business partners, and shareholders. Haier and GE Appliances will support and have access to consumers and suppliers in Haier’s and GE’s respective and complementary regions. In particular, this transaction will provide GE Appliances access to the demand for its high-quality products in the China market and position the company for further international growth. Furthermore, by creating a larger, more global company, the transaction will provide increased opportunities for all employees.
Mr. Liang Haishan, Chairman of Qingdao Haier Co., Ltd., commented: “Qingdao Haier and GE Appliances are leading appliance businesses in the Eastern and Western hemispheres. The alliance of both parties will lead to a great deal of mutual benefit. Qingdao Haier and GE Appliances are highly complementary businesses, particularly in the areas of brand, market, product innovation, and supply chain and quality management. This coming together will further enhance both the Haier and GE brands. GE Appliances’ highly-experienced and successful management team will continue to guide the direction of the business and will be involved in the governing board. In addition, Qingdao Haier will provide support and employee development opportunities within our global operating platform. We benefit from KKR’s experience and extensive network, which have really added value to this acquisition.”