Morgan Stanley issued a report on Friday highlighting General Electric CompanyGE after the announcement of a significant restructuring deal. Currently Morgan Stanley rates GE as Equal-weight while a price target is unavailable.
Nigel Coe and Michael Sang, analysts at Morgan Stanley, wrote, "GE has announced a restructuring of GE Capital that envisages a sale of its mid-market commercial lending and leasing businesses, remaining consumer assets ex-SYF holding, in addition to the announced sale of its real estate assets to Blackstone and others….we stay bullish since higher multiple industrial earnings mix-up,and we believe that remaining verticals earnings will not suffer a significant discount."
Morgan Stanley believes that this deal would reduce GE Capital to its core industrial verticals. $35 billion of capital is expected to be raised from these transactions while accounting for $2.5 billion of income in 2016. Morgan Stanley believes that one of the reasons for the restructuring is that GE is working with regulators to declassify itself as a SIFI. Overall, analysts believe that the restructuring is equity friendly long term.
Former CEO Jack Welch offered his take on the deal: "I like the package. It looks like a smart move and right for the changing financial landscape."
General Electric Company last closed at $25.73.
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