By Kim Yoo-chul
Staff Reporter
General Electric (GE) confirmed Wednesday that it has been in talks with LG Electronics to sell the U.S. maker’s home appliance business.
``The candidates become very obvious,’’ Jeffrey Immelt, chairman and chief executive of the second-biggest American company in terms of market share, said during a breakfast meeting with businessmen held in Seoul’s Grand Hyatt Hotel.
``It is LG Electronics in South Korea and Haier of China and I can say LG is clearly one of the leading bidders,’’ Immelt said. When asked if he met with Nam Yong of LG Electronics, he however, declined to elaborate.
GE said early this month that it will spin-off its century-old appliance unit, which had given the company $7.2 billion in revenue, last year.
Industry experts are still hesitant about whether the players themselves should pay the possible acquisition money. Analysts have estimated the business could sell for between $4 billion and $8 billion according to various situations.
LG said later in the day that it hasn't decided whether it will bid for GE's appliances unit.
``We're reviewing the possible impact of the sale of the GE's appliances unit on our company, but we haven't decided anything yet,'' LG said in a regulatory filing.
The Korea Exchange earlier asked LG to clarify media reports of a possible bid for GE's appliances unit.
``Yes, it’s a strong possibility for LG to acquire the GE’s unit. We are waiting for the right timing to take action,’’ a reliable LG source told The Korea Times.
``Home appliance business is one of LG’s key cash boxes and as far as I know, we are positive about the deal,’’ the source said. The source, however, asked not to be identified, as he is not authorized with media.
The comment from Immelt came after Nam admitted his company is looking into it very carefully, while adding the entire appliance industry could be reshaped by the outcome of GE’s deal. The LG’s top dog said he had no plans to meet the GE Chairman.
``Since a century ago, GE’s home appliance unit has been a great contributor to what we stand for now. But the appliance business is limited to our home-turf,’’ Immelt said emphasizing that the strengthening of their relationship with the overseas leading player in the industry is a reasonable option.
GE’s business structure ranges from manufacturing jet engines to servicing commercial private loans.
Analysts are questioning Immelt’s intentions citing the acquisition size. But they have generally agreed that LG has the ``chance’’ to increase their market share in North America.
``Considering the size, there are not many that can afford the deal in cash. One interesting thing is that LG secured a springboard to go one step further,’’ a local analyst said.
Despite mounting worries over weakening consumer confidence in the United States due largely to continuing macro-economic woes, LG was found to lead some segments of U.S. home appliance market.
According to data from Stevenson Company, a market research firm, the maker of home appliances captured the No. 1 status in front-loading washing machines during the first quarter of this year in terms of revenue with 23.2 percent, up 1.8 percentage points from a year ago.
Whirlpool, Kenmore and Maytag followed with 22 percent, 15.8 percent and 11.4 percent, respectively, according to the Louisville-based firm.
Sources said Samsung Electronics have confirmed that it doesn’t have any interest in the bidding. Weeks ago, Samsung combined its home appliance business with its digital media division.