(Reuters) — General Electric Co said it would sell its appliance business to China’s Haier Group for $5.4 billion in cash, another step in its push to sell its non-core assets and project itself as a technology company.
The deal comes weeks after GE walked away from a deal to sell the business to Sweden’s Electrolux for $3.3 billion, following months of opposition from U.S. antitrust regulators.
GE said the deal values the appliance business at 10 times last 12 months earnings before interest, taxes, depreciation, and amortization (EBITDA). Whirlpool Corp is valued at 7.7 times.
GE shares fell 2.3 percent in premarket trading.
GE said earlier this week it would shift its headquarters to Boston, a move aimed at lowering its tax bill and tapping talent in city that is fast becoming a tech hub.
For Haier, the deal means ownership of a century-old appliance business that makes refrigerators, freezers, clothes washers and dryers across brands such as Monogram, Café, Profile and Artistry. The business trails only Whirlpool Corp in the U.S. white goods market and reported revenue of $5.9 billion last year.
The deal, Haier’s biggest ever, will give a big boost to its U.S. business, which held less than 5 percent of the market last year.
The company has been mostly present in the highly competitive, so-called “value segment” of the U.S. market and analysts expressed concern about the impact its bigger presence would have on the pricing dynamics.
“Even if Haier doesn’t have a history of dumping prices in the United States, as for example LG and Samsung has, this is still an unknown player, a Chinese player,” DNB Bank ASA analyst Christer Magnergard told Reuters.
“(Haier) may have a somewhat different agenda than just having high profitability in the United States in 2016.”
Haier said the transaction includes GE Appliances’ 48.4 percent stake in Mabe, a Mexican appliance company that has a joint venture and a sourcing relationship with the business for 28 years.
The deal will be subject to customary regulatory filings in China and antitrust approvals in the United States, Mexico and Argentina, said a person authorized to speak on behalf of Qingdao Haier Co Ltd, the Haier unit making the purchase.
The deal is also to be approved by shareholders of Qingdao Haier as well as KKR and Haier Group, who jointly own 50.8 percent of the company, the person said.
Haier will continue to use the GE Appliances brand and retain the business’s headquarters in Louisville, Kentucky and its current management team, the companies said.
Goldman Sachs was GE’s finiancial adviser and Sidley Austin LLP was its legal adviser.