General Electric Co. (GE) is looking to shed one of its oldest businesses, the century-old home appliance business. The Louisville-based household appliances business, was first reported yesterday by Bloomberg News report. After the market close, Ted Mann of Marketwatch.com reported yesterday that sources told him that the company has now stepped up its efforts to find a buyer the business, which Mann says is one of GE's final ties to American consumers.
Around 6,000 people are employed at Appliance Park, which has added about 3,000 workers and undergone $800 million in renovations since 2009, she added.
This is not the first time that GE tried in 2008 to sell the operation which includes refrigerators, ranges, air conditioners, washing machines and dryer. At that time, the company hired Goldman Sachs Group Inc. to run the sale but ultimately had to pull back on that decision when it couldn't find any potential buyers and plans for a spinoff stalled because of the recession.
After the sale stalled, GE plowed more than $1 billion into the businesses to refresh its entire line of appliances and has added 3,000 jobs at its Kentucky appliance factory since 2010. In 2012 it brought over a senior executive from its aviation division, Chip Blankenship, to get the business back in shape.
GE has since invested heavily in reviving the business and received high marks for its attempts to manufacture more home appliances in the United States.
The business is still profitable, but its low margins and significant labor costs no longer seems a fit for company. The division is said to be out-of-step with GE's other industrial businesses, which sell heavy equipment like jet engines and gas turbines that then generate years of lucrative service revenue.
The company has recently renewed efforts to sell the appliance operation, the people said. "They are out there talking to people trying to get something done," the person said.
GE Chief Executive Jeff Immelt has promised investors to grow his industrial businesses and sell ones that aren't seen as core, setting a target of raising $4 billion from the sales of such businesses this year. Last month, GE agreed to buy the energy assets of Alstom SA for $17 billion, in what would be the company's biggest-ever acquisition.
The Louisville-based appliance operation isn't a large contributor to GE's bottom line. The appliance and lighting businesses earned $381 million, just over 2% of GE's operating profit last year, and it generated $8.3 billion of revenue, less than 6% of GE's total revenue.
GE's board of directors is expected to discuss the sale at a meeting next week, according to Mann's sources.