General Electric Co. reportedly is in talks about selling its century-old household appliances business, a unit that’s a prominent part of the company’s history and responsible for many of life’s modern conveniences.
GE has moved to revive efforts to divest the division behind the invention of the electric toaster in 1905, sources told Bloomberg News, after an unsuccessful attempt six years ago.
The company was waiting to firm up its acquisition of Alstom SA’s energy assets before pursuing options including an outright sale of the appliances business, said the sources, who asked not to be identified because the process is private. With the Alstom deal now signed, GE is talking to bidders for the white goods unit, the people said.
GE Appliances and Lighting includes refrigerators and stoves that trace their roots to the early 20th century, with electric clothes washers that GE introduced in 1930 and light bulbs, invented by co-founder Thomas Edison. The unit generated more than $8 billion in sales last year, or 5.6 percent of the company’s total revenue. It may fetch $1.5 billion to $2.5 billion in a sale, the sources said.
For GE, selling the division would be part of a greater strategy to exit businesses in which the company is not a leader or poised for growth. The company, based in Fairfield, Conn., ranked third in U.S. market share in appliances such as dishwashers, refrigerators and cooktops as of 2011, with Whirlpool Corp. in the top spot, followed by Sweden’s Electrolux AB, according to research service Statista.
Chief Financial Officer Jeff Bornstein said after GE’s first-quarter earnings report that the company projects as much as $4 billion in divestitures this year.
A spokesman for GE declined to comment.
In May 2008, GE said it planned to sell or spin off its appliances business, hiring Goldman Sachs Group Inc. to explore options. Chief Executive Officer Jeffrey Immelt said at the time that the division was too tied to the tumultuous U.S. market and needed to be more globally focused.
Immelt, who failed to find a buyer for the unit early in the financial crisis, chose to invest $1 billion in new factories and products to make the business more competitive against global companies such as Korea’s Samsung Electronics Co. The appliances and lighting unit has made a big push to develop light-emitting-diode bulbs, moving away from the incandescent lights created by Edison.
After the financial crisis, during which GE’s financial arm dragged down the company, Immelt started a program to reshape the business around its industrial units and cut costs. He sold real estate holdings and stakes in foreign banks, and also exited NBCUniversal.
Last month, GE agreed to acquire the energy assets of Alstom for $17 billion, the largest deal since Immelt was appointed CEO in 2001. The acquisition followed several recent purchases in the oil and gas market, including paying $3.3 billion in April 2013 for Lufkin Industries Inc.
Lighting the way
The General Electric Co. formed in 1892 by merging Charles Coffin’s Thomson-Houston Co. and Thomas Edison’s Edison General Electric Co. Combining their patents made it easier to produce complete electrical installations relying solely on their own patents and technologies.
Several of Edison’s early business offerings are still part of GE, including lighting, transportation, industrial products, power transmission and medical equipment.
The first GE Appliances electric fans were produced as early as the 1890s. A full line of heating and cooking devices was developed in 1907.