Haier is trapped to buy GE home appliances Hearsay integration is harder than takeover

Absrtact: For the uproar of Haier's involvement in bidding for the U.S. GE Home appliance business, Qingdao Haier Securities representative Liu Tao, in a written reply to the first financial daily reporter yesterday, said the company is not convenient to respond. Haier Group CEO Rui

"The company is not in a good time to respond," said Liu Tao, a representative of Qingdao Haier Securities Agency, in a written reply yesterday to a journalist at the first financial daily, in a bid to get a buzz about Haier's bidding for the home appliance business of GE.

Haier Group CEO Zhang

In 2008, GE also wanted to sell its home appliance business, and Haier was one of the contacts, and GE abandoned the sale plan. After six years, whether Haier can get the GE home appliance business, there are still many unknowns. Predictably, if Haier buys GE appliances, it will borrow KKR, an overseas strategic investor, and consolidation will be harder than acquisitions.

Borrow Power KKR

According to foreign media news, the United States General Electric TEPCO to sell its home appliance business, Haier Group is the most likely buyer, the acquisition of the case price of 2.5 billion U.S. dollars (about 15.479 billion yuan). If the deal succeeds, it will help Haier to greatly enhance its position in the international market, especially the U.S. market brand awareness and recognition.

Turning to GE's 2013 earnings, GE's home appliances-lighting business accounted for 8.3 billion dollars, accounting for about 5.7% of GE's total operating income of 146 billion dollars. If the dollar and the RMB 1:6 exchange rate, that is, GE's home Appliances-lighting Business annual income scale of nearly 50 billion yuan. From this analysis, GE, if sold, will be home appliances and lighting business separate treatment.

2013, Haier Group's two listed companies Qingdao Haier, Haier electrical appliances (01169. HK) 's operating income is 86.488 billion yuan, 62.26 billion yuan respectively. However, GE's brand and channel in the U.S. home appliance market are valuable.

In addition to lighting, GE's main household appliances include refrigerators, freezers, stoves, dishwashers, washing machines, dryers, microwaves, water filtration and softening systems for residential use. Currently, GE is the second largest supplier of white goods in the United States, with market share second only to Whirlpool. GE sells home appliances through retail outlets and construction contractors, using multiple brands such as GE Monogram, GE Café, GE profile, GE Artistry, and so on.

A private-equity home appliance analyst believes that if GE and Haier, a willing to sell, one wants to buy, "money is not a problem." Haier can combine strategic investors KKR, launched a special fund, Haier in which the big head on the line.

In fact, the internationally renowned private equity fund KKR, in July this year, just completed the 3.28 billion yuan, the strategic stake in Qingdao Haier 10% matters. The intention of cooperation between the two sides clearly points out that KKR will help Qingdao Haier develop smart home, improve incentive mechanism and carry out overseas mergers and acquisitions.

Consolidation is harder than acquisitions

"Money is not a problem, how to integrate it is difficult." "said the home appliance analyst of the private equity fund.

Earlier, in the financial crisis, Haier has acquired Sanyo Motors in Japan, Southeast Asia, refrigerators and washing machine assets, and New Zealand's Netherfield Parker. However, the "Sanyo" Brand was merged, the market position gradually declined.

China electromechanical import and Export Chamber of Electrical Appliances Branch Deputy Secretary-General Zhou that, unlike Sanyo Motor, GE is a well-known multinational company. Therefore, if the successful acquisition of Haier, the test is whether it can maintain the original market position of GE home appliances, and achieve profitability, the second is whether to retain GE's team, and to enhance Haier's own internationalization level.

Zhou believes that Lenovo's acquisition of IBM's ThinkPad notebook business is a successful case, it is worthy of Haier's reference.

"GE's home appliances, many are looking for factory production, Haier buy it map what, first to think clearly", in Zhou View, brand, channel and technology, Haier is the most valued asset.

China Household Electrical Appliances Business Association, the National Consumer Electronics Channel Alliance Secretary-General Wu Hanjian also believes that, because Haier in the United States already have factories, so, the acquisition of GE home appliances business for Haier, the greater value lies in the U.S. market brand, marketing network and global operational capabilities.

Zhou warned that Haier in the past overseas mergers and acquisitions, are the output of corporate culture. However, it is not appropriate to treat large enterprises like GE with the mentality of "snake swallow Elephants", but to turn themselves into elephants in mergers and acquisitions in order to grow into real multinationals.

Six years ago, Zhang, chairman and chief executive officer of Haier Group, abandoned the acquisition of GE's home appliance business for concerns over cross-cultural integration. is currently advancing to the Internet to transform the Haier Group, this time to seize the opportunity? In addition to Haier, but also to see Samsung, Electrolux and other bidders out of the cards.