Haier's Outbound M&AA Case Study on Acquisition of GE's Appliance Business by Haier

Transaction Background

2PwC | Strictly private and confidential

USD 5.6 Billion

38 Days

144 Days

150 Professionals

• Acquisition of GE’s Appliance (“GEA”) business by Haier is a milestone in China outbound investment history. It is also the biggest deal in Haier’s M&A history and an important step forward on its globalization strategy.

• GEA is headquartered in Louisville, Kentucky in United States. Known as a leading home appliance manufacturer in North America, GEA has the top-notch logistic and distribution capabilities and a strong retail network covering the US market.

• The deal has transformed the landscape of the global home appliance market and established a new partnership and alliance between Chinese and US companies. Chinese company started to entering into the North and South America market expeditiously.

Main Challenges

3PwC | Strictly private and confidential

Handful bidders globally participated in the process, a non-exclusivity negotiation

3 weeks due diligence, mainly focused on VDR review and management presentation, high competence of advisors is required

Asset deal, complicated arrangements on divestments involved

Impact by failure of Electrolux and GEA’s deal in 2014

Why Haier Can Win – From Advisor’s Perspective

4PwC | Strictly private and confidential

Competitive offer

High deal certainty

“Extremely tight”schedule

Well-preparation

Outstanding collective team efforts

5PwC | Strictly private and confidential

One Stop Service Provided by PwC

Financial Advisor

HR Due Diligence

Lead Financial Advisor

Tax Due DiligenceFinancial Due DiligenceEnvironmental Due Diligence

IT Due Diligence

6PwC | Strictly private and confidential

Signing to Closing…

2016.1.14Signing

2016.6.6Closing

Supplemental Information

Due Diligence

Tax/Transaction Structuring

Financial Advisor and Lawyer have involved in the whole transition period to help coordinate different teams to gather information and solve problems while ensure all the closing conditions are met

Financing Negotiation

Employee System

Purchase Price

Allocation

Auditing

System Identification and Transfer

Planning

Preparation of ~300 legal

documents on closing

Design of Payroll and

Welfare Structure

Major Asset Restructuring

Anti-trust

Review

Transaction Tax

Estimation

Control Mechanism

Planning

Synergy Analysis

TSA

Intellectual Properties

Insurance

Brand Planning

Negotiation on Side

Agreements

7PwC | Strictly private and confidential

CFIUS

CFIUS has been increasingly focused on foreign acquisition in US technology sector, particularly in semiconductor, cyber-security and IT.

Affected by political and economic dynamics between China and U.S.，Chinese state-owned enterprises which has once had

business in North Korea will face increasing scrutiny from CFIUS.

This increased level of activity at CFIUS is largely attributable to the Trump presidency. Atmosphere in Washington DC is very different this year – the US government tends to hold more conservative views and many more politicians taking a political stance against that Chinese companies acquire US firms

In 2016, Haier did not file for CFIUS review by evaluating the situation at that time; but if the transaction was carried out now, we would suggest to file for CFIUS review. However, we believe the result will be no different.

CFIUS Review in 2017：as

reported by Reuters，9

deals have been rejected by CFIUS in 2017.

Considering the current international economic and political environment, several other countries are starting to establishing foreign investment review mechanism due to national security reasons – e.g. Germany and UK

GE Appliance 并购经验分享

Information Technology

GEA Acquisition Overview

IT Role & Responsibility

尽调 交易 交接 整合

3

Due Diligence 尽调

•主要工作重点在于帮助业务做出正确的成本分析，同时通过对信息化系统的了解，帮助业务更清楚的了解风险及未来整合方向、成本及协同机会。

人力

• 成本

• 其他维度：能力、级别、年

龄、流失风险

系统

• 资产统计

• 成本（过去+未来）

• 整合、新建、替代的可能性

数据

• 资产统计

• 潜在价值

• 标准规范

管理

• 管理体系

• 管理团队

• 考核标准

技术

• 核心平台

• 人员能力

• 发展方向

文化

• 沟通文化

• 团队文化

• 管理文化

4

Transaction Prep

•根据尽调及双方披露，进一步确认成本及潜在价值/风险，并帮助业务准备交接

资产确认 风险预防

过渡计划 交割计划

沟通机制 团队稳定

5

Closing

• As part of the deal team, assisting in the transfer of IT assets, and start the transition plan.

• Protect all critical data assets, considering compliance, especially reginal requirements –data compliance, retention requirements…etc.

• Lots of communication to keep team upbeat about the acquisition.

资产交割 启动过渡

团队交割 风险屏蔽

管理沟通 数据保障

6

Post-deal Integration

• TSA – exit options – replace or inherit.

• Communication key to success

• One option: Collaboration 1st, consolidation 2nd, replacement 3rd.

协同团队 集团标准

管控机制 TSA

成本+机遇 团队稳定

7

Culture Challenge

•语言不是唯一的障碍，双方管理、沟通、处理问题的文化/方式都有很大不同

•成功的整合需要双方包容对方的不同

8

培训 语言

合作委员

会规范标准

短期协同

项目

职业发展

机会

www.haier.com

谢谢！

9

Thank You!

8

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