The world’s second largest home appliances manufacturer Electrolux has said it is in talks to buy General Electric's household appliances business, seeking to increase its foothold in the USA which is growing faster than its other markets in Europe.
GE confirmed it is evaluating options for the home appliances business, including discussions with the Swedish group and other interested parties.
New York start-up Quirky, which has partnered with GE to market smart-home products, is another suitor for the GE business and is working with an investment bank to put together a bid, one person familiar with the matter said.
"AB Electrolux today confirmed that it is in discussions regarding a possible acquisition of the appliances business of GE. No agreement has been reached, and there can be no assurances that an agreement will be reached" Electrolux, a smaller rival to Whirlpool, said in a statement on Thursday.
GE's home appliances business, which sells appliances under the GE Monogram, GE Cafe and Hotpoint brands, could be worth between $2 billion and $2.5 billion, according to people familiar with the matter, who asked not to be named because they were not authorised to speak with the media reports Rueters.
The U.S. diversified conglomerate is trying to sell its appliances unit as Chief Executive Jeffrey Immelt seeks to allocate resources to higher-growth businesses.
The appliance is almost exclusively focused on the U.S. market and lacks a global scale, and GE believes it could be more valuable when being part of a global appliances group such as Electrolux, said one person familiar with the plan.
After suffering from weak economies and currencies in Europe and Brazil that cost cuts and improvement in the North American market could not offset, Electrolux has seen European demand start to recover this year albeit still lagging North America.
In 2013, western Europe accounted for 28% of group sales while North America represented 32%. Organic growth in North America was 7% while in Europe it was 0.4%, so expanding in the USA makes sense for Electrolux.
These talks are at least the second time that G.E. has held discussions to sell off its appliance business unit, after first trying six years ago. Among those that the company negotiated with at the time were Electrolux and the Asian appliance manufacturers Samsung and LG. Those negotiations failed, probably in large part due to the global financial crisis at that time.
However rumours are swirling that LG Electronics and Samsung may also look to boost their footprint in the U.S. Other potential bidders include GE's Mexican partner Controladora Mabe SA and China's Haier Electronics Group
A potential deal with Whirlpool is extremely unlikely as it would raise snit-trust concerns in the US market and would almost certainly come under regulatory scrutiny.