GENERAL ELECTRIC was the pioneer of many of the gadgets that would now be seen as indispensible in the modern home, but once were luxuries: the lightbulb, the washing-machine and the toaster, to name three. By the middle of the 20th century, GE had become a household name across the world. However, on September 8th the venerable firm announced it had agreed to sell its appliances business to Electrolux, a much smaller Swedish competitor, for $3.3 billion.
Over the decades since Thomas Edison founded it in 1892, GE has become a cumbersome conglomerate, in all sorts of businesses. Under Jeff Immelt, its boss since 2001, it has begun to slim down. In 2007 GE sold its huge plastics division; last year it completed the sale of NBCUniversal, its film and television empire; and this year, as part of a plan to shrink GE's huge financial-services division, its credit-card business was spun off. GE had tried to sell the appliances business before, in 2008, but the global financial crisis got in the way. The reason why it has tried again, this time successfully, is clear from the company's financial statements: over the past three years the division that groups together appliances and lighting produced 5% of GE's turnover, but just 1% of its profits. Besides getting GE out of the riskier bits of finance, Mr Immelt is pushing it further into sophisticated, high-margin capital goods such as jet engines, gas turbines for power generation and equipment for fracking rigs.
The latest deal is in some ways more important for the buyer, Electrolux, than it is for GE. The Swedish appliance-maker aims to use the takeover to double its share of the American market, as well as to build up scale to compete with the likes of Beko of Turkey and LG of South Korea, which benefit from lower production costs. Curiously, the successful bidder was not Haier, an ambitious Chinese firm, or Whirlpool, an American rival—two manufacturers that have already stated that they want to add capacity to stay competitive. That may be because Electrolux paid around 7.3 times GE Appliances' earnings for 2013: this is a significant premium compared to the value the stockmarket puts on firms such as Whirlpool, according to Nigel Coe at Morgan Stanley, a bank. How quickly Electrolux will be able turn GE Appliances into a profit-making machine that justifies the price it paid is as yet unclear. What is certain is that in the ever-more competitive global market for white goods, the task may not be easy.