GE to divest healthcare unit, separate Baker Hughes

  • GE to divest healthcare unit, separate Baker Hughes

GE to divest healthcare unit, separate Baker Hughes

Last year, GE cut its dividend in half and slashed thousands of jobs. The shares surged in early trading. The company said it would focus on the aviation, power and renewable energy businesses. "This is about how you can take a name like GE and re-pivot them for the future".

Investors gave a thumbs-up.

Seaport Global Securities analyst Sonny Randhawa said GE would probably divest its interest, now valued at $31 billion, through share sales rather than a corporate buyout. GE's shares jumped almost 8% to $13.74 Tuesday on news of the plan, the stock's best day in more than three years.

A series of acquisitions and mergers followed over the next 25 years, until in 1920 when Victor Electric was acquired by GE, a manufacturer of x-ray tubes.

The changes to GE's structure are part of the organization's plans to reduce debt by $25 billion by 2020.

"We are finished", Flannery said.

While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell.

- GE Aviation continues to be a leader in the aviation industry. Culp, a former Danaher Corp. CEO Larry Culp as lead board director.

Flannery's latest moves cap a strategic review he has been pursuing since taking the helm past year from Jeffrey Immelt, while effectively marking his second attempt to present a turnaround to investors.

"GE's mission and technology change the lives of billions of people around the world", Flannery continued.

Institutional investors have recently bought and sold shares of the company.

And GE isn't alone when it comes to radiology giants making sweeping changes - within just the a year ago. GE also has agreed to shed its transportation unit, which makes railroad locomotives. US Bancorp DE's holdings in Baker Hughes A GE were worth $876,000 at the end of the most recent quarter.

GE expects to generate cash from 20 percent of the value of GE Healthcare, while returning the remaining 80 percent to shareholders in a tax-free distribution. Until the healthcare unit split the 12 cents per share dividend will be maintained. GE will be roughly twice the size of the next biggest public company in Massachusetts (TJX Cos.) based on revenues.

However, now GE plans to sell its 62.5% stake in Baker Hughes over the next two to three years.

GE shocked Wall Street - and regulators - in January when it announced a $6.2 billion insurance loss and warned it will need to inject $15 billion into the business.

The news follows a hard year for the company, which has experienced a loss of $100 billion in wealth with its stock dropping by 55 percent against a 15 percent overall fall of the Dow.

In other news, CEO Maria C. Borras sold 19,571 shares of Baker Hughes A GE stock in a transaction on Wednesday, May 9th.

WINTON GROUP Ltd lifted its position in shares of Baker Hughes A GE Co (NYSE:BHGE) by 29.6% during the first quarter, HoldingsChannel.com reports. The company has a market cap of $14.55 billion, a PE ratio of 63.64, a price-to-earnings-growth ratio of 5.36 and a beta of 0.71.

A number of other research analysts have also weighed in on BHGE.

What's more, GE's oilfield offerings were still limited compared to its rivals, constraining growth in the event of a recovery.

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".

That didn't last long.

Flannery said the resulting company would be a "new GE, a high-tech, industrial GE, a simpler, stronger and more focused company".

Bloomberg's Brandon Kochkodin, Cecile Daurat, Scott Deveau and Phil Serafino contributed.