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Trian Partners Invests $2.5 Billion In General Electric, Values Stock As High As $45 By 2017

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Trian Partners Invests $2.5 Billion In General Electric, Values Stock As High As $45 By 2017
  • Shares of General Electric Company (NYSE: GE) spiked higher by more than 4 percent Monday morning.
  • Nelson Peltz's Trian Partners disclosed a $2.5 billion stake in General Electric.
  • The investment firm noted that GE is "executing a bold transformation" that will generate "attractive" returns for years to come.

Shares of General Electric spiked higher by more than 4 percent early Monday morning after the investment firm Trian Partners disclosed a new $2.5 billion investment in the Dow component.

According to a press release, Trian's Nelson Peltz and Ed Garden has been engaging in informal dialogue with General Electric's management team since 2013. Over the past few months, Trian has conducted investment due diligence, including on-site visits and meetings with key management officials which led to the announcement of Trian's 98.5 million share stake in General Electric.

From their due diligence, Trian concluded that General Electric is "executing a bold transformation" that will generate "attractive" returns in the year ahead as the company continues to "reshape" its portfolio from a broad conglomerate to a leading industrial company that is focused on the "attractive" infrastructure end markets.

Trian has not pushed General Electric for a seat on its board of directors as management's strategy and direction is "broadly in line with our recommendations."

"We invested in GE because it is undervalued and underappreciated by the market despite what we believe is a transformation that will allow its world-class industrial businesses to drive attractive shareowner returns," Nelzon Peltz, Chief Executive Officer and Founding Partner of Trian said in the press release. "Our recent discussions with Jeff [Immelt] and his team have solidified our belief that they are highly motivated to fully deliver on GE's transformation and share much common ground with Trian on ways to improve long-term shareowner value."

Valuation

Finally, Ed Garden, Trian's Chief Investment Officer and Founding Partner noted that General Electric's stock could be worth $40-$45 per share by the end of 2017 and deliver an earnings per share of at least $2.20 in 2018.

Posted-In: Analyst Color Long Ideas Hedge Funds Top Stories Analyst Ratings Movers Trading Ideas General Best of Benzinga

 

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