The Chinese brand that built a U.S. reputation from selling college dorm refrigerators said it will buy General Electric Co.’s (ge) appliance unit today for $5.4 billion.
Haier, based in coastal Qingdao, is a former state-owned firm transformed in the 1980s by Zhang Ruimin, who remains CEO. The story goes that he gave workers sledgehammers so they could destroy the faulty appliances the state-owned company was making and start again.
Now in his mid sixties, Zhang, who didn’t go to college because of the country’s Cultural Revolution spanning the late ‘60s and early ‘70, is one of the country’s richest men. One of his sledgehammers is on display in the National Museum.
“Haier has a stated focus to grow in the U.S., build their manufacturing presence here, and to invest further in the business,” GE CEO Jeff Immelt said in a release .
Haier arrived in the U.S. in 1999 with low-cost, small refrigerators. A year later it invested in a South Carolina factory. It now sells washers, dryers, full-size refrigerators, TVs, and single-room air conditioners in the U.S. and holds a market share about a third that of the leader, Whirlpool Corp. (whr).
GE has been trying to unload its white goods business since December, when antitrust regulators scrapped its $3.3 billion sale to the Swedish brand Electrolux AB (electrolux.ab).
It’s not the first time Haier has been interested. In 2010, Haier said it was interested in GE’s appliance unit but didn’t buy because the price was too high, according to the Wall Street Journal.
The deal for GE’s appliance division, which enjoys a strong brand, is similar to Lenovo’s (lnvgy) purchase of IBM’s PC business a decade ago for $1.25 billion. That deal, despite the downturn in the PC business and initial skepticism, is now thought of favorably for Lenovo for giving it an entry into international markets (where it would later buy Motorola and IBM’s server business) and producing reliable cash streams.
In a release, GE said its GE Appliances unit would continue marketing current GE brands for 40 years.