12. Why GE wants the acquisition of the home appliance unit by LG?

Recently GE announced that they will let GE home appliance be on acquisition by other leading bidders. The company amongst many other home appliance manufacturer who will acquire GE home appliance have not been decided yet, however, LG has been considered the most possible for GE. LG has not decided whether it will bid for GE’s appliances unit. Many analysts predict that it is strong possibility for LG to acquire the GE’s unit.



Meanwhile, GE confirmed Wednesday that it has been in talks with LG Electronics to sell the U.S. maker’s home appliance business. I found some of interesting aspects of this huge acquisition plan from GM’s side in Jeffrey Immelt, chairman’s speech.

His emphasis on the business structure diversification thorough M&A

During a breakfast meeting with business men in Seoul, he stressed that Business portfolio is stable signify the death of company. The reason why he adopted this extreme term “the death of company” is that business is more likely to be going downwards unless it is dynamically operating in market.
In the rapid-changing global market, GE’s appliances unit has been only operating in domestic market in homeland. This is behind the global trend. Therefore, the acquisition decision is in alignment of dynamic performance of GE on purpose of globalizing GE’s overall operation. Furthermore, it is a part of long-term plan of GE.


The original article link: http://www.koreatimes.co.kr/www/news/nation/2008/05/123_24908.html

This is GE’s ideas about the acquisition. These days, companies are not eager to be better at something they have not been able to be excellent in. They would rather choose to collaborate with others or sell out an unprofitable unit in business, and then focus on what they are performing greatly. As I have posted some articles on Knowledge outsourcing. GE’s home appliance acquisition is quite meaningful in terms of reflecting the business trend. As the leading company, they proudly announced the acquisition rather keep hurting themselves. Thus, they might be able to expect long-term effect on overall performance. I presume that this sort of long-term thinking would be the strategy of global companies like GE.


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