GE to divest healthcare unit, separate Baker Hughes

Grant Boone
June 28, 2018

But it is unclear if GE's spinoff plans will disrupt the operations of providers using its products.

The move comes on the heels of a lengthy managerial review conducted by GE management under newly-appointed CEO John Flannery, and is expected to be fully implemented in the course of the coming 12 to 18 months. Aviation has been highly profitable, but the power business profit has tumbled as sales of plants and services have slowed, and renewable energy profit margins are in the single digits.

- GE Aviation continues to be a leader in the aviation industry. "Today's announcement does nothing to change those commitments or our focus in creating in a stronger, simpler GE".

"Our businesses will be the center of gravity and will run on a new operating system that we believe will improve our operations and cash performance".

S&P Global Ratings responded to the news by placing GE's "A" long-term rating on CreditWatch with "negative implications".

The spinoff decision could offer an opportunity for the separate entity to funnel its energy into the most promising areas in which GE Healthcare now operates, Haller said. Bank of New York Mellon Corp now owns 4,132,870 shares of the company's stock worth $130,762,000 after acquiring an additional 671,600 shares during the period. Over the next seven years, GE shelled out more than $10 billion on additional deals, buying companies such as Wellstream and Dresser. GE has already unloaded NBC Universal, its appliance business and much of GE Capital, the banking division that almost killed the company during the financial crisis. The company's quarterly revenue was up 1.4% compared to the same quarter last year. analysts expect that Baker Hughes A GE Co will post 0.78 EPS for the current year.

GE Healthcare's core business is medical imaging, monitoring, and other high-tech hospital equipment.

As part of its healthcare spin-off, GE expects to monetize 20% of the existing business, then distribute the remaining 80% to shareholders. Following the completion of the transaction, the chief executive officer now directly owns 3,042 shares of the company's stock, valued at approximately $112,462.74. "Moody's anticipated that the company would need material changes to its business portfolio", the ratings firm said.

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GE likely will divest its interest through a series of share sales rather than a corporate buyout, says Seaport Global's Sonny Randhawa, since "the only buyers would be Halliburton or Schlumberger and neither of those would get regulatory approval".

GE Capital will also be pared down by $25 billion. In addition, the company is actively exploring options to reduce its insurance exposure. The change is effective Tuesday.

FILE PHOTO: Portable X-ray machines made by GE Healthcare are shown on board the hospital ship USNS Mercy (T-AH 19) prior to its departure from Naval Base San Diego on a four month Pacific Partnership humanitarian deployment to the South Pacific May 15, 2015.

General Electric Company (NYSE:GE) continues to work through plans to reorganize its business, and two more pieces to the puzzle came into focus yesterday.

Other analysts have also recently issued research reports about the company.

Flannery added, "Larry's track record on strategy development and execution, capital allocation and talent make him well suited to take on this role".

On Monday, GE said goodbye to its distributed power business, which sells equipment used to generate electricity in remote areas. We will now move forward with goal to make our company simpler and stronger and accelerate growth across our businesses.

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