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Shares of General Electric Co. (GE) jumped on Tuesday before the struggling conglomerate confirmed rumors that it plans to buy back its health division and sell its stake in oil services group Baker Hughes (BHGE).
GE indicated that the plans, which follow its ongoing strategic review, will mark a shift in direction to its energy, aviation and renewable energy activities and create an high technology simpler, stronger and stronger. The group also said it would maintain its dividend until the Heathcare unit is separated, but "will adjust" after that to put it "in line with industrial peers" . The announcements come as the former stock market leader is facing its first day of trading outside of the Dow Jones Industrial Average
GE's shares rose 1.65% after the report, indicating an opening price of $ 12.98 each, a move that would bring down the drop from the beginning of the year to around 25%. , 7%.
GE holds a 62.5% stake in Baker Hughes as a result of an agreement reached in 2017 with the Houston oil services company orchestrated by former CEO Jeff Immelt, but announced last February that She would leave the partnership before the expiry of a two-year lock-up. period. A sale before this period would require the approval of a committee of members of the board of directors, but the company said that it would leave the partnership "in an orderly manner over the course of two or three coming years".
Heathcare generated $ 4.7 billion in revenue for GE in the three months ending March, a 9% gain over the same period last year, while profit margins increased by 20%. base points at 15.6%. "Segment profit of $ 735 million is up 11% due to continued growth in volumes and productivity, partially offset by negative pricing and higher program investment," the company said.
"GE Healthcare is an industry leader with financial strength, global reach and advanced technology." Flannery said Tuesday. "Our talented healthcare team will continue to provide precision health solutions, building on our legacy of technological innovation that produces results for patients."
GE said its last weeks expelling the Dow would not change its focus on the execution of previous plans to improve business performance, saying The street that the movement "is not doing anything to change these commitments or our goal in creating a stronger and simpler GE."
GE's shares remained stable in the months following its first-quarter results in April, with an impressive $ 28.7 billion in sales, double-digit growth in its transportation activities, Aviation and health care and a promise from Flannery. sacred cows "in the hits plans to streamline the business.
"We are reviewing a number of structures, we are currently working in detail with the board of directors," Flannery told investors April 20.
In fact, it's only yesterday that the Boston-based group announced that it would sell its Distributed Power business to Advent's private equity firm for $ 3.25 billion, continuing the plan to Flannery to divest 20 billion dollars of assets. Under the terms of the agreement, Advent will acquire the Jenbacher and Waukesha engine brands as well as three facilities in Austria, the United States and Canada, GE said in a statement. The company Distributed Power, a division of GE Power, achieved a business figure of $ 1.32 billion last year. The transaction is expected to close in the fourth quarter.
Last month, GE and Wabtec Corp. (WAB) have agreed on an $ 11.1 billion merger that will combine the transportation activities of both US-based companies and CEO John Flannery's ambitions to streamline the Boston conglomerate.
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