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GE Nearing Sale Of Its Appliances Unit To Electrolux

GE Nearing Sale Of Its Appliances Unit To Electrolux
By: Sam Quest
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Electrolux AB (ADR) (ELUXY) is said to be in advanced talks with General Electric Company (GE) for the purchase of the latter’s appliances business, which is being valued at around $2 billion.

General Electric Company, one of the largest industrial names in the world, has been implementing its plans to divest businesses that generate less than 10% in margins. The management wants to focus on core industrial competencies and build on them. The company had already sold NBCU Universal to Comcast Corporation (CMCSA) in 2009, while its North American retail finance division had been spun off as Synchrony Financial (SYF), earlier in July.

Going forward, GE is aiming to focus more on businesses like Power & Water, Aviation, and Transportation which earn around 20% in operating margins. Segments GE want to get rid of include Home Appliances (6% of total revenues) and Lightning & Energy Management (7% of total revenues), which earn operating margins of around 4.57% and 1.4%, respectively.

Companies in focus to bid for GE’s home appliances division include Electrolux and Quirky Incorporation. Sweden’s Electrolux is one of the world’s largest manufacturers of home appliances and industrial equipment, with 2013 revenues totaling $15.9 billion.

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