LG Electronics in the Lead for GE's Appliance Unit
The chief executive of General Electric named several "players" when asked about the future of the company's appliance business, which the huge U.S. conglomerate recently said it may spin off.
Jeff Immelt, chairman and chief executive of the second-largest U.S. company by market capitalization, cited LG Electronics, China's Haier Group and Mexico's Mabe among several companies, saying LG was "clearly one of the leading candidates."
"It will be very intriguing to see what happens," Immelt said. "It will fill lots of newspaper articles ... for the next 6 to 9 months."
Immelt was speaking from Seoul, where he was delivering a speech to a business group. The company earlier this month said it may part with its century-old appliances unit, which last year generated revenue of $7.2 billion.
Analysts have estimated the business could sell for $4 billion to $8 billion.
Shares in LG fell 3.6 percent in initial reaction to the prospect of a huge potential acquisition but later settled 1.8 percent down at 136,500 won ($130.5), lagging a firmer Seoul tech sector and a modest gain in the wider market.
"Immelt's comments seem to be aimed at drumming up interest from a small pool of potential candidates," said Steve Lee, an analyst at Goodmorning Shinhan Securities. "After all, considering the size of the deal, there are not many who could afford to pay that price."
"I doubt LG Elec would be interested in pursuing this deal, since there is little that the company can gain. There is a lot of overlap between the businesses with little premium potential for LG. GE is not exactly the high-end appliance name in the U.S., which does not fit so well with LG's strategy-focus on becoming a premium appliance maker," said Lee.
On Tuesday, the CEO of LG Electronics said the company was closely watching developments surrounding GE, but declined to say more. He said he had no plans to meet Immelt.
Last week, Immelt said GE had already received a lot of inquiries from potential buyers of its appliances unit, mostly from outside the United States, and added that the business was "easily sellable" even in a difficult market.
The unit could appeal to an Asian manufacturer looking for a well-known brand in the United States. Aside from Haier and LG, sources have cited South Korea's Samsung Electronics and Italy's Indesit as possible bidders, but none of those companies have confirmed interest.
Immelt said recently that GE conservatively could close a deal to part with the unit, the second-largest appliances maker in the United States behind Whirlpool , by 2009. "But it's one of those things that could move faster," he said last week.
GE has operations ranging from manufacturing jet engines to providing commercial loans.