Market Overview

GE Could Be Evaluating Hybrid Deals, IPO Spinoffs

GE Could Be Evaluating Hybrid Deals, IPO Spinoffs

General Electric Company (NYSE: GE)'s nearly yearlong strategic review of its business could result in an unexpected outcome: hybrid deals or an IPO spinoff.

What Happened

GE could sell one or more of its assets, but the company may be poised to oversee a hybrid deal that would give shareholders stakes in multiple companies, The Wall Street Journal reported. The deal would involve one of GE's divisions acquiring a smaller public company and then creating a new entity that would be listed on the stock market and separate from GE's business.

For example, GE Transportation makes diesel freight locomotives, and management may not want to sell the business outright, the WSJ report said. Instead, it would be merged with an acquired company and GE investors would be given a stake as part of a deal structured to avoid a large tax bill. The end result would be multiple larger businesses that are better-positioned than they are today as part of the same corporate umbrella.

Why It's Important

GE's ongoing strategic review comes at a time when the stock has lost more than half of its value in the past year, according to WSJ. The company continues to face pressure from shareholders, and management will likely field questions during the first quarter conference call on April 20; the annual shareholder meeting the week after; and during a major industrial conference May 23.

What's Next

GE CEO John Flannery is being "methodical and measured" in any decisions the company oversees, WSJ said. The executive is backed by sufficient access to capital to oversee any changes, and most of the major businesses units are now performing well, the report said. 

Related Links:

GE Takes $6 Billion Hit On Its Insurance Portfolio, CNBC Says Breakup Could Come In The Spring

Cramer Wants GE's Entire Board Added To His 'Wall Of Shame,' Faults Immelt And Flannery

Posted-In: John Flannery spinoff Wall Street JournalM&A News Rumors Media Best of Benzinga


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