General Electric to Spin-Off Retail Finance Unit in an IPO
General Electric (NYSE: GE) has confirmed its plans to spin-off a portion of its North American retail finance business in an IPO, starting next year.
In a filing on Friday with the SEC, the company said it expects to issue up to 20 percent of the equity of the retail finance unit, in exchange for cash that will be used towards the capital of a new company.
“GE currently intends to complete its exit from Retail Finance in 2015 through a split-off transaction,” the filing continued, “by making a tax-free distribution of its remaining interest in Retail Finance to electing GE stockholders in exchange for shares of GE’s common stock.”
The Financial Times says the expected IPO is part of a plan laid out earlier this year by CEO Jeff Immelt, to reduce General Electric's dependence on earnings from financial services.
The newspaper notes that GE's financial services division, while a money-maker for the company before and after the recession, took several big hits in 2008 and 2009 “that forced GE to cut its dividend and lost the company its triple A credit rating.”
The Wall Street Journal, meanwhile, says the spin-off is part of GE's move to focus more on its industrial operations.
In a separate action, GE has also agreed to sell its Advanced Sensors unit to Amphenol (NYSE: APH) for around $318 million. That sale is expected to close by year's end. Advanced Sensors, which sells products mostly to medical, automotive and industrial markets, employs about 1,600 people globally – and has facilities in North America, Asia and Europe.
In a press statement, Amphenol president and CEO R. Adam Norwitt says the products offered by Advanced Sensors are “uniquely complementary to our core interconnect offering, and represent a significant long-term expansion opportunity driven by the increased use of both technologies in supporting electronics functionality across a broad set of applications and markets."
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