Swedish appliance conglomerate AB Electrolux stated Aug. 14 that it is in discussions for a potential purchase of GE Appliances.
“No agreement has been reached, and there can be no assurances that an agreement will be reached,” the firm said in a news release. “Any further announcements will be made in due course.” The company would not comment beyond the short news release. Electrolux made the announcement to comply with securities regulations.
GE has been gussying up its appliances business and it is now a more attractive for potential buyers than it was six years ago, when GE wanted to sell it. GE announced with much fanfare in summer of 2012 that it was investing $1 billion to expand and modernize its Appliance Park in Louisville, Ky., and upgrade product lines. GE boasted it was bringing more parts production in house and relying less on sourcing for lower wage geographies.
GE instituted lean manufacturing in Louisville, improved plant layout and ergonomics and hired a small army of engineers to oversee the changes. In the transformation, GE became the fourth largest injection molder in the United States.
Besides expanding in Louisville, GE tapped focus groups for new ideas on features. It redesigned refrigerators and dishwashers to make them more user-friendly and multifunctional.
Until a few months ago, GE executives continued to trumpet the big cultural change at Appliance Park. When GE tried to sell the appliances business in 2008 the appliance sector was in the depths of a recession and no one appeared with an acceptable price. Its next tack was to invest heavily in the business to keep up with competitors. That the business is now for sale again suggests GE’s strategy might have been trying to sell it again and has been dressing it up for a second sales attempt.
Electrolux is a globally prominent appliance major with operations in 150 countries and with 2013 sales of $15.9 billion is about twice the size of GE Appliances.. The latter is concentrated in North America and with GE’s lighting business, logged $8.3 billion in sales.
GE was an appliance pioneer early in the 20th century with its lines of toasters, refrigerators, ranges and clothes washers. Promoting the early sales of the white goods it offered financial lending services that became its GE Capital business. It has publicly stated its intent on exiting businesses in which it is not a leader. Appliances represent less than 6 percent of its annual sales of about $145 billion.