CHARLOTTE, N.C. — The for-sale signs have returned to GE’s Appliance Park manufacturing complex for the second time in eight years.
Electrolux’s announcement last week that it is in discussions to buy the business confirmed an open industry secret: that GE had put its white-goods business back on the auction block in recent months.
A buyout by Electrolux would give the Swedish manufacturer a leading share of the U.S. majap market. According to TWICE market research partner The Stevenson Company, GE is roughly tied with Whirlpool brand for first place, with each controlling just over 15 percent of the market, while Electrolux’s largest U.S. brand, Frigidaire, trails Kenmore, LG, Samsung and Maytag for seventh place.
In a statement, Electrolux indicated that no agreement had been reached and it couldn’t assure that one would.
Another possible suitor may be Quirky, a crowdfunded New York start-up that openly solicits product concepts and works with various manufacturers and retailers to bring them quickly to market.
GE has taken an equity position in Quirky, and is particularly interested in the company’s home automation spinoff Wink, which has developed an open platform and such connected products as Aros, a room A/C that self-adjusts to usage patterns and can be controlled remotely via mobile device.
According to Bloomberg report, Quirky would lead a group of private-equity investors in acquiring a majority stake in GE Appliance while GE would retain a minority position in the business.
Industry veteran Bill Trawick, president and executive director of the NATM Buying Corp., and a former merchant at P.C. Richard & Son and Conn’s, said the time is right for a sale, now that more appliance brands are competing for a smaller pie.
“At the industry’s peak there were three top brands,” he told TWICE. “Today there are five, competing for a lot less business.”
Trawick believes GE will close the deal this time, and will likely do so within the next two months.
“The appliance division is a small part of GE’s business and is a poor fit within its portfolio,” he said. “Jeff [GE chairman/ CEO Immelt] tried to make a go of it by spending a billion dollars on new laundry and French-door [refrigerator] manufacturing, but the market’s been soft and there’s been no return on his investment.”
Trawick said he could see the value for Electrolux or other potential bidders in an acquisition, although the merit of the deal will hinge on the acquirer’s long-term access to the GE brand.
He added that integrating the GE business into existing operations could prove challenging, based on the difficulties Whirlpool encountered following its acquisition of Maytag in 2006.
GE first put its Louisville, Ky.-based majap business up for grabs in 2008. At that time, the conglomerate was looking to sell, spin-off or form a joint venture for the division at an estimated price tag of up to $8 billion.
Original contenders included LG Electronics, Turkish majap maker Arcelik, and GE’s Mexican production partner Controladora Mabe, although Haier became the leading acquisition candidate. The Chinese manufacturer eventually backed out due to weakening U.S. market conditions and difficulty in securing financing.
GE later added its lighting and distribution equipment businesses to the package, but eventually dropped its sale plans and instead invested $1 billion in the appliance division over three years in an effort to bring production back to the U.S. and update its plants and products.
The current asking price is about $2 billion, unnamed sources told Bloomberg.