In a bid to strengthen its presence in the global market, China's Haier Group bought U.S.-based General Electric Co.'s appliances manufacturing division for $5.4 billion.
The two companies announced the sale on Friday after several months of negotiation. According to Haier chairman and CEO Zhang Ruimin, the deal is in line with the company's efforts to gain a foothold in the American market. Zhang added that the transaction is set to benefit both companies.
Under the agreement, Shanghai-listed Qingdao Haier Co., of which the parent company owns 41 percent, will be the one acquiring GE appliances division, The Wall Street Journal reported. It would also grant Haier the rights to use the GE brand in its products for the next 40 years, which Haier hopes will help them penetrate overseas markets.
Haier will also gain hold of GE Appliances' 48 percent hold on Mexican appliance manufacturer Mae. However, GE Appliances' headquarters would still remain in Louisville, Kentucky.
GE Chairman and CEO Jeff Immelt expressed his optimism about the outcome of the deal, stating that Haier has what it takes to further build the business globally. Immelt also said that the appliance unit is doing well, which has attracted a lot of potential buyers.
The company initially tried to sell its century-old appliances arm to Swedish corporation Electrolux for $3.3 billion. However, negotiations were eventually abandoned in December after the deal was opposed by antitrust regulators from the United States, USA Today reported.
Haier was able to outbid other companies by providing a better offer than the previous deal, according to people privy to the negotiations. However, the sale is yet to undergo scrutiny by regulators, though observers claim that the Chinese company is likely to face the same problems due to its smaller presence in the U.S. market.
GE earlier said that its decision to sell its appliances arm is in line with its refocusing toward selling industrial products like jet engines and turbines.