GE Ready To Unplug Appliance Division?

May 28 (Bloomberg) -- General Electric Co. Chief Executive Officer Jeffrey Immelt said LG Electronics Inc. and China's Haier Group Corp. are among potential suitors that may acquire the company's century-old appliances division.

Immelt, who last week told investors the Fairfield, Connecticut-based company is also ``seriously considering'' a spinoff, named Mexico's Controladora Mabe SA, Sweden's Electrolux AB and Turkey's Arcelik A.S. as other potential suitors. The unit may draw bids of $3 billion to $8 billion, according to analysts at Citigroup Inc. and Goldman Sachs Group Inc.
``The players become very obvious,'' Immelt said during a breakfast meeting with businessmen in Seoul today. ``It's Haier in China, LG in Korea and so on. Of course, LG is one of the leading candidates.'' Buying GE's unit would help Seoul-based LG Electronics challenge Whirlpool Corp.'s lead in the production of appliances worldwide, while a purchase by Haier would give the Chinese company a household name to help drive its U.S. expansion. GE said this month it may sell the unit amid calls for the company to speed up divestitures of slower-growing operations.
GE's appliances division is the biggest provider of refrigerators, ovens and dishwashers for newly-built U.S. homes.

LG hasn't decided whether to bid for the GE unit, the company said today in response to a query by the Korea Exchange. LG is ``carefully monitoring'' the sale of GE's appliances division, Chief Executive Officer Nam Yong said yesterday. Zhao Rui, a spokeswoman at Haier, declined to comment. Speculation that LG will bid for GE ``has been overdone, without any concrete developments,'' James Kim, an analyst at Lehman Brothers Holdings Inc., wrote in a note today. ``According to our channel checks, GE and LG Electronics have not talked about this potential acquisition.''

GE fell 13 cents to $30.27 at 10:26 a.m. in New York Stock Exchange composite trading and have declined about 18 percent so far this year and 7 percent this month.
LG Electronics shares fell 3.6 percent to close at 134,000 won in Seoul. The stock has declined 14 percent this month as analysts at JPMorgan Chase & Co. and Deutsche Bank AG cut ratings on the stock, citing lower earnings prospects.
Haier Electronics closed unchanged at HK$1.2 in Hong Kong trading and has declined 28 percent so far this year and is up 1.7 percent this month.
``Both LG and Haier need GE to break into the U.S. market because it has a very strong brand,'' Castor Pang, an analyst at Sun Hung Kai Securities in Hong Kong, said. ``Buying GE would be a big advertisement for them. After all, the U.S. market is still a very big market.''

Immelt said today the sale of the appliances unit ``will be a long process.''
There have been ``lots of inquiries'' about the appliances unit, mostly from outside the U.S., and GE is also ``seriously'' considering a spinoff, Immelt said this month.
``We within GE agree that every business has to have a global footprint,'' he said today.
GE's appliances business had 27 percent of the U.S. market in 2006, the latest available data, according to Stephen Tusa, an analyst at JPMorgan Chase & Co. The unit had revenue of $7.2 billion in 2007, according to Credit Suisse Group estimates.
Whether LG Electronics, Haier or other companies participate in the sale remains to be seen, Immelt told reporters in a separate media briefing in Beijing today.
LG Electronics posted sales of 11.8 trillion won ($11.3 billion), including those of overseas affiliates, in 2007 from appliances. The North American market accounted for 29 percent of the division's first-quarter sales.

China's Economic Observer reported on May 24 that Haier is considering buying the GE unit and has held talks with China Development Bank on financing a bid. Still, the Qingdao, China- based company hasn't contacted GE yet, the newspaper said, citing an unidentified Haier official.
Haier, China's largest maker of home appliances, is the parent of Hong Kong-listed Haier Electronics Group Co. and Shanghai-listed Qingdao Haier Co. In 2005, the company, which sells products in the U.S. through retailers such as Wal-Mart Stores Inc. and Home Depot Inc., pulled out of a $1.28 billion bid for U.S. appliance maker Maytag Corp.

Haier Electronics
Haier Electronics will have sales of about HK$10.6 billion ($1.4 billion) in 2008, UBS AG analysts Randy Zhou and Erica Poon Werkun said in January. Qingdao Haier, which sells refrigerators and freezers, will have sales of 33.5 billion yuan ($4.8 billion) this year, according to UBS.
Qingdao Haier, whose shares are down 45 percent this year, gained 3.2 percent to 12.37 yuan in Shanghai.
Sales of washers, refrigerators and other appliances accounted for more than half of last year's $13.3 billion in sales at GE Consumer & Industrial. GE had total revenue of $172.7 billion last year. More than half of the company's sales come from overseas, while the appliances division is tied to a single market, primarily in the U.S.
Other potential bidders mentioned in analyst reports earlier included South Korea's Samsung Group.
Videocon Industries Ltd., India's largest consumer electronics maker, is studying the viability of a bid for the appliances division, Venugopal N. Dhoot, chairman of the Aurangabad-based company, said May 23.
General Electric today also unveiled a plan to cut its own water consumption by one-fifth by 2012 as part of its companywide conservation program, called ``ecomagination'' begun in 2005. The company also raised its goal of selling environmentally friendlier products to $25 billion by 2010, a 25 percent rise from its projection three years ago.