LG Will Clean Up, With or Without GE

Korea's LG Electronics could win GE's appliances unit and get within reach of No. 1 Whirlpool. But LG's organic growth is noteworthy, too

The LG Total Capacity Refrigerator which has 15" LCD TV with FM radio, temperature adjustment, room temperature display, water controls, a weather & info center, recipes, digital photo album, calendar, BioShield Anti-Bacterial Seal and other features. Robyn Beck/AFP/Getty Images


Ever since General Electric (GE) revealed plans to put its appliances business on the block May 16, Korea's LG Electronics has been on most everybody's short list as a potential buyer. While visiting Seoul on May 28, GE Chief Executive Officer Jeffrey Immelt further fueled the speculation by praising the Korean company as a potential buyer of GE Appliances. LG is "clearly one of the leading candidates," he said during his short visit. Calling LG "a great company," Immelt said "there are many things to be admired about a combination of LG and GE Appliances."


Best known as the maker of cheap microwave ovens and toasters a decade ago, LG has emerged as the world's No. 3 manufacturer of white goods after Whirlpool (WHR) and Electrolux (ELUX). It's also a top name in mobile phones (BusinessWeek.com, 4/30/08). It won't get GE Appliances without a fight, of course. Others on Immelt's list are China's Haier Group, Mexico's Controladora Mabe, Turkey's Arcelik and Stockholm-based Electrolux. Even if one of those other companies ultimately wins GE Appliances, LG is poised to challenge Whirlpool for the top spot in the global households business for years to come.


The Korean company has had the world No. 1 title in its sights for a while. Until Whirlpool took over Maytag in 2005, giving the Americans a big boost, LG had plans to seize the leadership in the industry by 2010. The Maytag deal put Whirlpool out of reach, but LG now could come close to realizing that ambition by acquiring the GE unit. LG's global appliances sales last year of $12.6 billion, when combined with GE's $7 billion or so, would roughly match Whirlpool's $19.4 billion and place it well ahead of Electrolux' $15.6 billion. "The GE unit will certainly whet LG's appetite," says Michael Min, electronics and tech specialist at fund manager Tempis Capital Management. "The question is pricing and terms."


In my opinion, LG grow up fast. LG electronics product famous for design, performance all over the world. LG have to upgrade their ability and quality to their brand value up. General Electronics and LG electronics help with each other. Now on they develop their capacity each brand to stand on the worldly brand.



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Min Kyu Jeong