GE Unit May Receive Bid By China’s Haier

By Jun 9, 2008, 10:24 PM Author's Blog  

Based on reports from FT the Chinese white-goods maker Qingdao Haier, which in 2005 teamed up with private equity firms Bain Capital and Blackstone (NYSE: BX) to bid for American icon, the appliances group Maytag, but lost that contest to Ripplewood Holdings, is considering a bid for General Electric’s (NYSE: GE) appliance business and has begun to approach investment banks to advise it.

People familiar with the process said that Haier is one of a large group of potential bidders with an interest in acquiring the GE operations, which could fetch up to $7bn.

White-goods makers from South Korea, Germany, Turkey, Mexico, Sweden and Italy, as well as private equity groups, were looking at the business, which had sales of $7.2bn last year but has long been one of the least profitable parts of GE.

Haier no longer needs the financial strength of a partner, as it was the case when the company first looked at Maytag. At the time, Haier lacked deep pockets and had to depend on partners to finance the offer. However, times have changed. Now the Chinese currency has appreciated and the Chinese government is encouraging companies to invest abroad.

However, that is not to say that management issues don’t exist for Chinese groups. That’s why Haier may consider a strategic alliance with a local US partner. Chinese computer maker Lenovo for example, turned to private equity firms General Atlantic and TPG for help in melding diverse cultures after it bought the personal computer business of International Business Machines in 2005. Haier may follow the same parallelism.

Nevertheless, the timetable for the auction has not yet been determined and GE so far has declined to comment.

Haier could not be immediately reached for comment.

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