GE in Talks With Electrolux to Sell Appliances BusinessDavid Welch and Richard Clough
General Electric Co. is in talks with Electrolux AB on the sale of its home appliance business, the companies said. Quirky Inc., a consumer-product development startup, is also interested in the unit, two people with knowledge of the matter said.
Quirky, a five-year-old startup, is teaming up with private-equity firms including Blackstone Group LP in its bid, said one of the people, who asked not to be identified discussing private information. Quirky and the backers would likely take a majority stake with GE retaining a piece, the people said.
The century-old division is on the block for a second time as Chief Executive Officer Jeffrey Immelt focuses on industrial operations at Fairfield, Connecticut-based GE. The unit could fetch at least $2 billion from the sale, people with knowledge of the deal have said.
“GE is evaluating a wide range of strategic options for our appliances business including discussions with Electrolux and other interested parties,” Seth Martin, a GE spokesman, said today. He declined to name other bidders. Electrolux confirmed its interest in a statement, saying there’s no guarantee a deal will be reached.
Quirky, which builds products based on ideas submitted by a community of online users, counts GE among its financial backers after the manufacturer made a $30 million investment in November. GE also opened up thousands of patents to New York-based Quirky when they formed a partnership last year to develop a line of smart-home devices, including an air conditioner controlled by smartphones.
Tiffany Markofsky, a spokeswoman for Quirky, declined to comment on its interest in GE’s appliances business, as did Peter Rose, a spokesman for Blackstone.
Electrolux is No. 2 in U.S. sales of appliances such as dishwashers, cooktops and refrigerators, behind Whirlpool Corp., according to research service Statista. GE ranked third by market share, Statista’s data show.
GE rose 0.2 percent to $25.88 in New York today. Electrolux climbed 2.3 percent to 172.6 kronor in Stockholm, the biggest advance on the OMX Stockholm 30 Index.
Electrolux, the maker of AEG stoves and Frigidaire refrigerators, is looking to boost revenue in Europe and the U.S., its largest single-country market, after several years of stagnant sales. While the company intends to expand organically, CEO Keith McLoughlin said last month in a Bloomberg Television interview that the company would consider acquisitions “when we see an opportunity that makes sense.”
The sale process is GE’s second attempt to offload the Louisville, Kentucky-based division, which introduced an electric toaster in 1905 and a home electric washing machine in 1930. In May 2008, GE said it hired Goldman Sachs Group Inc. to explore options, saying then that the unit was too tied to the tumultuous U.S. market and needed a more global focus.
After GE’s financial arm threatened to drag down the company during the 2008-09 credit crunch, Immelt began reshaping the parent around its industrial units. He sold real estate holdings and stakes in foreign banks, and also exited NBCUniversal.
Last month, the company conducted an initial public offering of GE Capital’s North American consumer-lending unit as part of a plan to eventually split off the rest of those operations.
Chief Financial Officer Jeff Bornstein said in an interview last month that GE plans to divest about $4 billion in non-financial businesses this year.