General Electric’s decision to Divide in the three companies have created a stir among business buyers who want to sell corporate units into multiple pieces, say people in several major business groups.
“I doubt that everyone will buy from the GE Store for the next few years,” said the head of one of the largest international purchasing companies, referring to the “GE Store” co-produced by former CEO Jeff Immelt. “I think there have been a lot of great things that will be on sale.”
Larry Culp, CEO of GE, last Tuesday announced the decision to split the company into a separate company focusing on health, energy and aviation. The division, he said, gives every GE business the freedom to choose its own strategy.
It was the latest in a series of business reforms that included IBM running its own professional business as well as planning sessions at Toshiba Japan and US medical company Johnson Johnson & Johnson.
This division is expected to be completed by 2024, by then PEREKA will join United Technologies, DowDuPont, ABB, and Siemens in abandoning the conglomerate system.
GE on Tuesday said it would abandon its healthcare business, which generates more than $ 17bn in annual sales and sales of MRI and ultrasound machines.
It will create its own integrated components for renewable energy, with components that do everything from designing gas turbines to controlling nuclear weapons, hydroelectric dams, and offshore wind farms.
It will leave owners who own an airline that manufactures jet engines and has long-term insurance claims.
The company sold plans for housing for the elderly as part of its unit GE Capital part of the financial services, which was not damaged. These policies, like most of GE’s finances, have cost the company billions.
But Culp’s long-term plans give interested buyers the opportunity to choose products at GE, which has a market capitalization of $ 118bn. “It will take them forever to relinquish medical care in 2023 and power in 2024,” said the official, who said Culp’s announcement was “to clear up another dispute over potential sales.”
GE’s avionics business, which develops commercial and military aviation systems, and its GE Unison division, which manufactures electronic pilot equipment, are the most important components.
“We are sharpening pencils,” added one of the world’s top operations officials. “I think anything other than medical care can sell at a better price in the private market than it seems.”
The official foresaw the potential for individual consumers to try to buy the GE jet engine business. “The business of a good jet engine is a wonderful business,” he said. However, some experts are skeptical about whether the unit’s size is $ 22bn in annual revenue and its cost could keep consumers from reaching it.
GE’s largest business is power, with a net worth of $ 33bn by 2020, and could be sold for a small amount. “Any business that is part of the electronics industry is considered insignificant. These individuals may be eligible for privacy,” said Deane Dray, an expert at RBC Capital Markets.
He was added to the local business: “There may be small businesses to buy.”
The region, built by the likes of French giant Alstom, has a low margin and predicted by CreditSights experts to make only $ 1.3bn in operating revenue for this year in what one buyer calls a “hodgepodge of closed businesses”. “.
Business-oriented businesses include electrical equipment such as gas and steam power turbines, and its flexible environment, which includes the production of coastal and coastal wind turbines, wind turbines, power plants, and grid portfolio of high power converters. and regional breakers, among many businesses.
Other areas with opportunities include 45 percent of GE in retail sales AerCap, which operates after closing its airline leasing business, GECAS, $ 34bn, this month. “I think that would be a good investment,” said one of the buyers. “It ‘s something that can happen. He has a lot of debt to repay and then sell,” he said.
The analysts also spoke of a financial backer with GE, the head of the long-term insurance business, which is expected to receive $ 15bn to deal with future claims.
“He needs to get rid of insurance. There is no way he can put this on top of the aviation industry, “said Nigel Coe, a researcher at Wolfe Research.
“If your assumption is that the goods are enough to repay the loan, then the sale is a handshake and you take the keys and leave,” added Scott Davis, a research expert at Melius Research.
GE declined to comment on future trades.
The proliferation of secret businesses to complete the release of GE could well signal the end of one era in financial management and the rise of another. In the past, private buyers such as Blackstone and Advent International have purchased large products from GE. Former top executives like Steve Bolze and John Krenicki also moved into the buying industry, joining Blackstone and Clayton, Dubilier & Rice, respectively. Former CEO Jeff Immelt is a business partner at NEA.
Management giants such as Apollo, Blackstone, Brookfield, Carlyle, and KKR are growing at a rapid pace as GE was at its peak, but it is making money and directing independent companies. Remote organizations do not support each other and have boards and independent business processes. They are in many ways different from conglomerate, where centralized management builds a diverse state of assets to address economic and environmental instability.
“This is a very serious matter,” said one of the allies who called for the end of GE’s “deadline” of business processes, with managers responsible for allocating funds to a wide range of businesses.
“If one C-suite could do this, the Soviet Union would probably not.”