WSJ: Electrolux gains momentum in bid for GE appliances unit


Around the time GE was closing a deal to buy Alstom's power business in France, the company was already discussing the possibility of selling its U.S. appliance business to Electrolux (OTC:ELUXF, OTCPK:ELUXY), and WSJ says the length of the courtship indicates the talks may be further along than thought.

GE's Appliance and Lighting unit reported $381M in profit in 2013 on sales of $8.3B, making it the third-smallest of GE's seven industrial business lines by revenue, but that also makes it a prime target for sale as GE tries to pare low-margin businesses and focus its efforts on such heavy industrial products as jet engines, power turbines and oil industry equipment.

LG Electronics and Samsung also are said to be in the mix of possible buyers, and Quirky Inc. reportedly has teamed up with Blackstone to work on a possible bid.

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Comments (26)
  • capitolp
    , contributor
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    Feels like GE selling part of it's soul.
    18 Aug 2014, 08:58 PM Reply Like
  • DrP79
    , contributor
    Comments (2401) | Send Message
     
    no more than selling its toasters and other small appliances

     

    The main reason to have kept the appliances division in recent years is that it was a training ground for managers. If you could eke out a profit there, then you would have learned valuable concepts that could be applied in other areas with much greater prospects.
    18 Aug 2014, 10:43 PM Reply Like
  • dectra
    , contributor
    Comments (649) | Send Message
     
    Agreed, Dr.

     

    One wonders how much of a realistic profit margin exist in this area; not to mention the opportunity cost that is lost by not employing their assets in a more lucrative area.
    19 Aug 2014, 07:19 AM Reply Like
  • pfifla1
    , contributor
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    I felt the same way... ge wants to be out of any type of consumer business... seems like the appliance business is profitable so not sure why they feel the need to exit.
    18 Aug 2014, 09:10 PM Reply Like
  • JMReno
    , contributor
    Comments (83) | Send Message
     
    In addition to being one of the smaller and worst performing business units, it has minimal technical synergy with the likes of Aviation and Energy. The same obviously was said about NBC Universal (television and theme parks).
    18 Aug 2014, 09:44 PM Reply Like
  • pfifla1
    , contributor
    Comments (588) | Send Message
     
    It just seems when they sell off profitable businesses they seem to do so at or below market. not at a premium.
    18 Aug 2014, 09:58 PM Reply Like
  • capitolp
    , contributor
    Comments (713) | Send Message
     
    @pfifla1, I'm confused as well, what was wrong with making 381 million in profit, its not like GE can't buy whatever the hell it wants. Always thought that was the point of business, make money. And who in the hell thought it was a good idea to do business with or in France.
    18 Aug 2014, 10:45 PM Reply Like
  • dectra
    , contributor
    Comments (649) | Send Message
     
    It's not a 'core business' for an industrial company, Capitolp.

     

    And for what it's worth, if it wasn't for the French, you'd still be part of England..... :)
    19 Aug 2014, 07:23 AM Reply Like
  • capitolp
    , contributor
    Comments (713) | Send Message
     
    There are a lot of industrial companies that wished they had a non 'core business' that brought in 381 million. It was GE's mistake wanting to be a Bank that almost put them in the grave, and that toaster money was looking pretty good than. Love French Toast, not English Muffins, but didn't that good deed cost a head or two. Take care dectra.
    19 Aug 2014, 08:21 AM Reply Like
  • dectra
    , contributor
    Comments (649) | Send Message
     
    Don't get me wrong, Cap...381 million IS a bit of change. But, in the end, if the money invested in these non core businesses causes an opportunity cost to slip away, it really puts that amount of money in a new light.

     

    As to the 'bank' issue; don't seem to recall hearing how the money that poured in during the good times was a 'problem'. But then again, I'd agree that as a non core business, it really has no place in GE.

     

    Cheers!
    19 Aug 2014, 08:29 AM Reply Like
  • franklja
    , contributor
    Comments (405) | Send Message
     
    As a former GE manager, I can tell you that being a profitable business in GE is not good enough today. You have to have double digit profitability %...and it needs to start with a 2! Check out GE's 2nd quarter results and ratio the profits to revenue for the businesses; here is what you get: Power & Water 18%, Oil & Gas 14%, Aviation 20%, Healthcare 16%, Appliances & Lighting 5%. Energy Management only has 4%, but that business does have some synergies with Power & Water and Oil & Gas, so Jeff may give them a little more time to see if they can improve...but not too much...just changed out the leadership again! Unfortunately Appliances & Lighting are really the last vestages of GE's once great consumer businesses and no longer fit with the rest of the portfolio.
    19 Aug 2014, 03:33 PM Reply Like
  • pfifla1
    , contributor
    Comments (588) | Send Message
     
    funny how things change... used to be their main business but I see that it does not fit in with the direction they are headed... other industrial companies have successful appliance divisions - Bosch?? I just don't see the need to give it away... While I like alstom's products and synergies, the compromises that had to be made to get the deal done seem to make the deal less attractive.
    19 Aug 2014, 09:02 PM Reply Like
  • DUP
    , contributor
    Comments (308) | Send Message
     
    The French also bailed out Japan Nissan...The French where our buddies in the revolution....they also built a lot of stuff here.
    23 Aug 2014, 06:57 PM Reply Like
  • Felix Lumpe
    , contributor
    Comments (752) | Send Message
     
    Unless GE uses the proceeds from thus sale to buy back stock, it seems that the reduction in earnings would increase their P/E ratio, and hence have the all to familiar effect of reducing shareholder value, something all of us GE shareholders are painfully familiar with. I believe the same can be said for the GE Capital (Synchrony) divestiture. Can anyone explain how else shareholder value would be preserved without pointing to some "pie in the sky" explanation using investments in other business or similar baloney which never materializes.
    19 Aug 2014, 01:41 PM Reply Like
  • DrP79
    , contributor
    Comments (2401) | Send Message
     
    two things

     

    1. GE is looking to become more of an industrial firm as opposed to a financial firm. The spin-off and the recent buying of French assets are part of this move. The market gives a higher multiple for industrial firms.

     

    2. Selling appliances increases the overall yield of the firm as appliances are a low margin business.

     

    3. Selling low margin stagnant business and buying high margin growing business is good for the owners.
    19 Aug 2014, 02:03 PM Reply Like
  • Felix Lumpe
    , contributor
    Comments (752) | Send Message
     
    Thanks for your response DrP. The theory sounds reasonable. Now they must execute.
    20 Aug 2014, 11:18 AM Reply Like
  • DrP79
    , contributor
    Comments (2401) | Send Message
     
    Execution is always an issue.

     

    Yet if you want to understand truly understand strategy, one should prepare to execute as part of the planning stage. There is a great book, by the former Vice Chair of GE and a noted management consultant:

     

    Execution: The Discipline of Getting Things Done by Larry Bossidy, Ram Charan and Charles Burck (Jun 4, 2002)
    20 Aug 2014, 11:32 AM Reply Like
  • DrP79
    , contributor
    Comments (2401) | Send Message
     
    Execution is always an issue.

     

    "The best-laid schemes o' mice an' men Gang aft agley," as Burns said in the original

     

    http://bit.ly/1na6LZf

     

    Yet if you want to understand truly understand strategy, one should prepare to execute as part of the planning stage. There is a great book, by the former Vice Chair of GE and a noted management consultant:

     

    Execution: The Discipline of Getting Things Done by Larry Bossidy, Ram Charan and Charles Burck (Jun 4, 2002)
    20 Aug 2014, 11:35 AM Reply Like
  • DrP79
    , contributor
    Comments (2401) | Send Message
     
    Execution is always an issue.

     

    "The best-laid schemes o' mice an' men Gang aft agley," as Burns said in the original

     

    http://bit.ly/1na6LZf

     

    Yet if you want to understand truly understand strategy, one should prepare to execute as part of the planning stage. There is a great book, by the former Vice Chair of GE and a noted management consultant:

     

    Execution: The Discipline of Getting Things Done by Larry Bossidy, Ram Charan and Charles Burck (Jun 4, 2002)
    20 Aug 2014, 11:35 AM Reply Like
  • DrP79
    , contributor
    Comments (2401) | Send Message
     
    Execution is always an issue.

     

    "The best-laid schemes o' mice an' men Gang aft agley," as Burns said in the original

     

    http://bit.ly/1na6LZf

     

    Yet if you want to understand truly understand strategy, one should prepare to execute as part of the planning stage. There is a great book, by the former Vice Chair of GE and a noted management consultant:

     

    Execution: The Discipline of Getting Things Done by Larry Bossidy, Ram Charan and Charles Burck (Jun 4, 2002)
    20 Aug 2014, 11:36 AM Reply Like
  • DrP79
    , contributor
    Comments (2401) | Send Message
     
    Execution is always an issue.

     

    "The best-laid schemes o' mice an' men Gang aft agley," as Burns said in the original

     

    http://bit.ly/1na6LZf

     

    Yet if you want to understand truly understand strategy, one should prepare to execute as part of the planning stage. There is a great book, by the former Vice Chair of GE and a noted management consultant:

     

    Execution: The Discipline of Getting Things Done by Larry Bossidy, Ram Charan and Charles Burck (Jun 4, 2002)
    20 Aug 2014, 11:36 AM Reply Like
  • DrP79
    , contributor
    Comments (2401) | Send Message
     
    Execution is always an issue.

     

    "The best-laid schemes o' mice an' men Gang aft agley," as Burns said in the original

     

    http://bit.ly/1na6LZf

     

    Yet if you want to understand truly understand strategy, one should prepare to execute as part of the planning stage. There is a great book, by the former Vice Chair of GE and a noted management consultant:

     

    Execution: The Discipline of Getting Things Done by Larry Bossidy, Ram Charan and Charles Burck (Jun 4, 2002)
    20 Aug 2014, 11:36 AM Reply Like
  • DrP79
    , contributor
    Comments (2401) | Send Message
     
    Execution is always an issue.

     

    "The best-laid schemes o' mice an' men Gang aft agley," as Burns said in the original

     

    Yet if you want to understand truly understand strategy, one should prepare to execute as part of the planning stage. There is a great book, by the former Vice Chair of GE and a noted management consultant:

     

    Execution: The Discipline of Getting Things Done by Larry Bossidy, Ram Charan and Charles Burck
    20 Aug 2014, 11:37 AM Reply Like
  • DrP79
    , contributor
    Comments (2401) | Send Message
     
    Execution is always an issue.

     

    "The best-laid schemes o' mice an' men Gang aft agley," as Burns said in the original

     

    http://bit.ly/1na6LZf

     

    Yet if you want to understand truly understand strategy, one should prepare to execute as part of the planning stage. There is a great book, by the former Vice Chair of GE and a noted management consultant:

     

    Execution: The Discipline of Getting Things Done by Larry Bossidy, Ram Charan and Charles Burck (Jun 4, 2002)
    20 Aug 2014, 11:38 AM Reply Like
  • mvegas711
    , contributor
    Comments (2) | Send Message
     
    If you think pennies, you get pennies. If you think dollars, you get dollars.
    They want to sell bigger items, for bigger dollars!
    20 Aug 2014, 05:10 PM Reply Like
  • DUP
    , contributor
    Comments (308) | Send Message
     
    Philips has been the world's biggest lighting company for decades, Philips surpassed both GE and Osram on LED technology. Philips should take parts of GE, and eh parts of Osram , as Siemens is also getting rid of it's lighting div. Cus they can't compete with Philips. Philips sold it's large appliance div decades ago in the 80's to Whirlpool, GE almost got that, but Philips sold to the bigger bid Whirlpool. In the 80's they wanted to Expand large appliances, in Europe, now they bail completely. I think B&D has been licensed for years to use GE name on small appliances. There should be an investigation as to how LG and Samsung got all that shelf space in what seems overnight...like Matsushita did in the 60's. Great expose on Matsushita/Panasonic on Frontline, how they got into the U.S. like over night. My GE large appliances, Profile stuff has been flawless 7 years. Ceramic top fancy stove with convection, built in the oven microwave, all good, made in Kentucky, Other stuff is Canada, some China , everywhere
    23 Aug 2014, 07:04 PM Reply Like
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