GE to spin off consumer business
General Electric said on Thursday that it plans to spin off its entire GE Consumer & Industrial group, accelerating efforts to shed slower-growing businesses.
By Bloomberg |
BOSTON: General Electric, two months after placing its century-old appliance unit on the block, said it plans to spin off its entire GE Consumer & Industrial group to shareholders, accelerating efforts to shed slower-growing businesses.
The strategy means GE may exit more of the most well-known divisions to consumers, including light bulbs and electrical switches. GE isn���t ruling out a sale or other options for the group, which had $13.3 billion in sales last year. GE Consumer & Industrial was formed five years ago by combining those divisions and had 50,000 employees and $13.3 billion in sales last year.
Chief executive officer Jeffrey Immelt lowered his 2008 targets in April and put the appliance division in play a month later, saying at the Electrical Products Group investor conference in May that GE may consider a spinoff of the broader group. Shareholders have called on Immelt to speed divestitures to focus on businesses with more growth potential, such as energy. A spinoff is a simpler way to divest the businesses, in part because of combined administrative functions.
���It became clear that the fastest, most efficient step we could take in completing the transformation of our industrial portfolio would be to focus on a possible spinoff of the entire unit,��� Immelt said in a statement.
GE shares rose 35 cents to $27.54 in early morning trades on New York Stock Exchange composite trading. The stock had dropped 30 per cent in 12 months before Thursday. Consumer & Industrial accounts for about 15 per cent of the Fairfield, Connecticut-based parent company���s workforce. The group accounted for about 7.4 per cent of GE���s $172.7 billion in total sales last year. GE, co-founded by Thomas Edison in 1892, told employees in an email on Thursday morning it���s pursuing this strategy while not ruling out a sale or partnerships.
GE Consumer & Industrial is part of a larger group called GE Industrial, one of six major segments of the parent company. Analysts have questioned whether Immelt can get acceptable bids in a slowing US economy. In such a ���difficult��� environment, a spinoff may make more sense and GE is ���seriously��� considering the move, Immelt said at the May investor conference.
The strategy means GE may exit more of the most well-known divisions to consumers, including light bulbs and electrical switches. GE isn���t ruling out a sale or other options for the group, which had $13.3 billion in sales last year. GE Consumer & Industrial was formed five years ago by combining those divisions and had 50,000 employees and $13.3 billion in sales last year.
Chief executive officer Jeffrey Immelt lowered his 2008 targets in April and put the appliance division in play a month later, saying at the Electrical Products Group investor conference in May that GE may consider a spinoff of the broader group. Shareholders have called on Immelt to speed divestitures to focus on businesses with more growth potential, such as energy. A spinoff is a simpler way to divest the businesses, in part because of combined administrative functions.
���It became clear that the fastest, most efficient step we could take in completing the transformation of our industrial portfolio would be to focus on a possible spinoff of the entire unit,��� Immelt said in a statement.
GE shares rose 35 cents to $27.54 in early morning trades on New York Stock Exchange composite trading. The stock had dropped 30 per cent in 12 months before Thursday. Consumer & Industrial accounts for about 15 per cent of the Fairfield, Connecticut-based parent company���s workforce. The group accounted for about 7.4 per cent of GE���s $172.7 billion in total sales last year. GE, co-founded by Thomas Edison in 1892, told employees in an email on Thursday morning it���s pursuing this strategy while not ruling out a sale or partnerships.
GE Consumer & Industrial is part of a larger group called GE Industrial, one of six major segments of the parent company. Analysts have questioned whether Immelt can get acceptable bids in a slowing US economy. In such a ���difficult��� environment, a spinoff may make more sense and GE is ���seriously��� considering the move, Immelt said at the May investor conference.
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