Let's talk about GE, rather than all your other BS.
>>Published: January 31 2002 20:05 | Last Updated: January 31 2002 22:38
General Electric has begun negotiations to sell its UK domestic appliances business, including Hotpoint, in an apparent retreat from its ambition to bring European sales of fridges and washing machines up to the level of its market share in the US.
The talks, with Merloni, are likely to see the Italian group taking full ownership of the two companies' 50:50 joint venture, General Domestic Appliances, paying an estimated £170m ($240m) for GE's stake.
Though small by GE standards, the disposal would further decrease the percentage of its sales from traditional industrial products compared with its growing financial services arm, GE Capital.
On Thursday, Jeffrey Immelt, GE's chief executive, said he was comfortable with GE Capital climbing to between 40 and 45 per cent of the total group. "We don't want to become a bank, but there are no sacred cows," he said in an interview.
He stressed there were several acquisitions planned in faster-growing industrial sectors such as medical equipment.
The deal would make Merloni the leader in the UK white goods business, and strengthen its position as the third-biggest supplier in this industry in Europe.
Vittorio Merloni, Merloni's chairman, said he hoped that discussions over the sale could be concluded within the next few months. GE declined to comment on whether the two companies were talking on this matter.
Merloni became a partner with GE in the UK venture less than two months ago, when it bought out the share of Marconi in GDA for £130m. Merloni, which is listed on the Milan stock exchange but has 70 per cent of its shares controlled by Mr Merloni's family and associates, has grown strongly in recent years and had revenues last year estimated at E2bn ($1.7bn).
The Italian company has been keen to gain a firmer foothold in the UK, which was Europe's fastest-growing market for white goods last year.
No price for the mooted transaction between Merloni and GE has been officially disclosed. However, it is thought that GE might be willing to sell its share in GDA for about £170m.
Last year GDA is believed to have made an operating profit of about £25m on sales of £500m, selling goods such as washing machines and refrigerators primarily under the Hotpoint brand.
About 90 per cent of GDA's sales are in the UK, where it employs 5,000 people. |
