· Deal valued at 10x EBITDA (last 12 months), gain of approximately $0.20 per share at closing
· Haier will continue use of the GE Appliances brand
FAIRFIELD, Conn – January 15, 2016 – GE announced today it has signed a definitive agreement to sell its Appliances business to Qingdao Haier Co., Ltd. (“Haier”) for $5.4 billion. The transaction has been approved by the board of directors of GE and of Haier, and remains subject to customary closing conditions, including Haier shareholder approval, and regulatory approvals. The transaction is targeted to close in mid-2016.
“We are pleased to be selling our Appliances business to Haier, which is committed to growing the business globally,” said GE Chairman and CEO Jeff Immelt. “GE Appliances is performing well and there was significant interest from potential buyers, helping drive a good deal which will benefit our investors, customers and employees.”
The transaction values GE Appliances at 10 times the last 12 months of earnings before interest, taxes, depreciation, and amortization. The sale will generate an after-tax gain of approximately $0.20 per share at closing. GE expects to offset the gain with restructuring in 2016. The Company will provide more details on the gain and restructuring on its fourth-quarter earnings call on January 22, 2016. As part of the transaction, GE has entered into a long-term agreement with Haier to continue use of the GE Appliances brand. Louisville will remain the headquarters for GE Appliances.
“We are proud of Appliances’ history and performance,” Immelt continued. “Haier has a good track record of acquisitions and of managing brands. 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.”
“Haier and GE share the same vision, and value innovation, customer service, and developing products of the highest quality,” said Zhang Ruimin, Chairman and CEO of Haier Group. “This transaction underscores Haier’s devotion to creating a global platform for innovation, which will benefit both Haier and GE Appliances and deliver enhanced value to all stakeholders. Haier is committed to investing in the U.S. In addition, together Haier and GE will explore opportunities for joint collaboration and, in doing so, establish a type of new alliance with comprehensive strategic cooperation between two world-class enterprises, which reflects our common understanding on opportunities brought by the Internet Era.”
GE and Haier also announced today a long term strategic partnership to explore cooperation in the areas of industrial internet, healthcare, and advanced manufacturing. GE will help Haier enhance the efficiency of its manufacturing plants, while Haier will help implement GE’s Predix platform. Both companies will work together on opportunities to develop and grow affordable consumer health initiatives in China.
Goldman Sachs provided financial advice to GE, and Sidley Austin LLP was GE’s legal advisor.
GE (NYSE: GE) is the world’s Digital Industrial Company, transforming industry with software-defined machines and solutions that are connected, responsive and predictive. GE is organized around a global exchange of knowledge, the "GE Store," through which each business shares and accesses the same technology, markets, structure and intellect. Each invention further fuels innovation and application across our industrial sectors. With people, services, technology and scale, GE delivers better outcomes for customers by speaking the language of industry. www.ge.com
Seth Martin, 203.572.3567
Matt Cribbins, 203.373.2424
Caution Concerning Forward-Looking Statements:
This document contains "forward-looking statements" – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," or "target." Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about our announced plan to reduce the size of our financial services businesses, including expected cash and non-cash charges associated with this plan; expected income; earnings per share; revenues; organic growth; margins; cost structure; restructuring charges; cash flows; return on capital; capital expenditures, capital allocation or capital structure; dividends; and the split between Industrial and GE Capital earnings. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: obtaining (or the timing of obtaining) any required regulatory reviews or approvals or any other consents or approvals associated with our announced plan to reduce the size of our financial services businesses; our ability to complete incremental asset sales as part of that plan in a timely manner (or at all) and at the prices we have assumed; changes in law, economic and financial conditions, including interest and exchange rate volatility, commodity and equity prices and the value of financial assets, including the impact of these conditions on our ability to sell or the value of incremental assets to be sold as part of our announced plan to reduce the size of our financial services businesses as well as other aspects of that plan; the impact of conditions in the financial and credit markets on the availability and cost of GE Capital Global Holdings, LLC’s (“New GECC”) funding, and New GECC's exposure to counterparties; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; pending and future mortgage loan repurchase claims and other litigation claims in connection with WMC, which may affect our estimates of liability, including possible loss estimates; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flows and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; New GECC's ability to pay dividends to GE at the planned level, which may be affected by New GECC's cash flows and earnings, financial services regulation and oversight, and other factors; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; customer actions or developments such as early aircraft retirements or reduced energy demand and other factors that may affect the level of demand and financial performance of the major industries and customers we serve; the effectiveness of our risk management framework; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation and litigation; our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions; our success in completing, including obtaining regulatory approvals for, announced transactions, such as the Appliances disposition and our announced plan and transactions to reduce the size of our financial services businesses; our success in integrating acquired businesses and operating joint ventures; our ability to realize anticipated earnings and savings from announced transactions, acquired businesses and joint ventures; the impact of potential information technology or data security breaches; and the other factors that are described in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014. These or other uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially.