GE CEO cites five potential bidders for appliances

SEOUL/BEIJING (Reuters) - General Electric Co GE.N Chief Executive Jeff Immelt on Wednesday named five non-U.S. appliance manufacturers, including China's Haier, South Korea's LG Electronics, Sweden's Electrolux, Mexico's Controladora Mabe and Turkey's Arcelik, as potential bidders for the company's century-old appliances business.

Jeff Immelt, CEO of General Electric, makes a speech during a breakfast meeting with South Korean CEOs at a hotel in Seoul May 28, 2008. REUTERS/Park Ji-ho/Yonhap

The chief of the second-largest U.S. company by market capitalization said it was “obvious” who would be interested in the unit, which last year sold $7.2 billion worth of refrigerators, washing machines and other household appliances.

“The players have become somewhat obvious,” Immelt told reporters in South Korea. “It is Haier in China, it is LG in Korea, it’s Mabe in Mexico, it’s Arcelik in Turkey.”

In Beijing, he added another name to the list of suspects: “Whether LG or Haier or Electrolux or others participate remains to be seen.”

None of those companies confirmed their interest.

After stunning investors in April with an unexpected drop in quarterly profit, GE said this month it would look to sell or spin off its appliances unit, saying the business was too focused on the United States.

Analysts and investors have estimated the business, which is No. 2 in the U.S. behind Whirlpool Corp WHR.N, could sell for $4 billion to $8 billion. Whirlpool is the world's largest appliance maker.

Immelt’s comments could be an effort to see if there are other interested bidders who have not yet made themselves known to the company, said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors, which manages $6.5 billion in assets and holds GE shares.

“I wonder if he’s not tapping tree trunks with a stick trying to figure out if there’s bees in there,” Sorrentino said.


Immelt’s remarks came just a week after he told investors GE that the company was “seriously” considering spinning off the appliances unit.

“The appliance process is still very early on, and much still has to be decided,” Immelt said in Beijing on Wednesday.

GE’s well-known brand name could appeal to a foreign appliance manufacturer looking to build its profile in the United States while capitalizing on lower-cost production.

LG 066570.KS said in a statement to the Korea Stock Exchange that it had not yet decided whether to bid for the GE unit.

A spokesman for Electrolux ELUXb.ST, the world's No. 2 home appliances maker, declined to comment, as did a spokeswoman for Arcelik ARCLK.IS, Turkey's leading appliance maker.

Sources have described Haier as interested, but the company has declined official comment.


Immelt said LG was “clearly one of the leading candidates.”

“They are a great company. They already have a presence in the U.S. Strategically, there are many things to be admired about a combination of LG and GE Appliances,” he said.

Analysts queried what LG would get from buying the appliance unit, as its brand is already known in the United States.

Goodmorning Shinhan Securities analyst Steve Lee said, “I doubt LG Elec would be interested in pursuing this deal, since there’s little the company can gain. There’s a lot of overlap between the businesses with little premium potential for LG.”

Lee said Immelt’s comments could be aimed at drumming up interest from a small pool of potential candidates with deep-enough pockets to buy the business.

South Korea's Samsung Electronics Co Ltd 005930.KS and Italy's Indesit Co SpA IND.MI also have been touted as possible bidders, but neither has confirmed an interest.

GE shares were down 5 cents at $30.35 on the New York Stock Exchange. So far this year they have fallen 18 percent, with most of the drop coming in the wake of its first-quarter earnings shortfall.

By way of comparison, the Dow Jones industrial average .DJI, of which GE is a component, is down 5.5 percent.

Additional reporting by Jon Herskovitz and Park Jung-youn in Seoul, Asli Kandemir in Istanbul, Adam Cox in Stockholm and Scott Malone in Boston; Editing by Keiron Henderson, Jonathan Hopfner, Ian Geoghegan and Alan Wheatley