20300244 Entry 12

LG Electonics denies Electrolux's proposal for joint bid for GE unit

LG Electronics yesterday denied a news report that Sweden's Electrolux proposed that they jointly bid for the home appliances unit of General Electronics.

"The report is groundless. We have not received any such an offer," said a spokesperson of the Seoul-based electronics company.

The Korea Economic Daily reported yesterday that LG Electronics was reviewing Electrolux's proposal for the bid, citing an unnamed industry source.

Electrolux and LG Electronics are the world's second and third largest home appliance maker, respectively, after Whirlpool Corp. GE is placed 10th in the world appliance market, while it ranks second in the U.S. market.

Electrolux and LG Electronics are one of the five potential bidders to buy the home appliances unit of GE, GE's CEO Jeffrey Immelt said in Seoul last week.

He earlier said that GE is considering removing its slower-growing home appliance unit, as the U.S. conglomerate seeks 10-percent annual profit growth.

Analysts say the GE unit, which posted $7.2 billion in global sales last year, could sell as much as $8 billion.

The acquisition of GE, the traditional home appliance brand in the United States, could help LG expand its presence in the world's largest economy, analysts said.

But they doubted whether the GE's appliances unit was an attractive acquisition target for LG Electronics, which has many overlapping business with GE.

When asked about the possible purchase of GE's appliances unit, LG Electronics' CEO Nam Yong said on May 27 that the company is "monitoring the situation as it will have a major impact on the landscape of the global appliances industry."

Echoing the CEO's remarks, the company said in a regulatory filing on May 28, "Although we have conducted an internal review on the impact (of the sale of the GE's appliances unit) on LG Electronics, no developments have been made so far regarding a bid."

On the same day, GE CEO Immelt said LG Electronics is "clearly one of the leading candidates" while naming five potential bidders for the GE unit.


By Jin Hyun-joo


(hjjin@heraldm.com)

2008.06.03


My thought

Business is like a game among the competitors. You have to pay attention not only to your inner environment but also to your outer environment, as we learn from the Potter’s Model. LG may buy GE or not. However, whether they buy GE or not they have to have a picture what will be happened to their industry. Whether the leading company buys or any other companies buy it will definitely affect to their company, especially like this huge sale in the industry.