Wired News – GE to Spin-Off Healthcare Business and Divest Stake in Baker Hughes as Part of Latest Restructuring

LONDON, UK / ACCESSWIRE / June 28, 2018 / If you want access to our free research report on Baker Hughes, a GE company (NYSE: BHGE) (“Baker Hughes”), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=BHGE as the Company’s latest news hit the wire. On June 26, 2018, General Electric Co. (NYSE: GE) (“GE”) announced major changes to its organization, following the completion of its strategic review. GE announced that it plans to spin-off GE Healthcare as a separate standalone Company. It also plans to divest its stake in Baker Hughes. A day before, on June 25, 2018, GE had announced the sale of its Distributed Power business to private equity firm Advent International, for a total consideration of $3.25 billion. Register today and get access to over 1,000 Free Research Reports by joining our site below:

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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, Baker Hughes most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:

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The decisions have been approved by the Company’s Board of Directors. GE aims to be a simpler, stronger, leading high-tech industrial Company, and going forward, plans to concentrate on its Aviation, Power, and Renewable Energy businesses.

Commenting on implementing changes in GE, based on the strategic review, John Flannery, Chairman and Chief Executive Officer (CEO) of GE, said:

“We are aggressively driving forward as an aviation, power, and renewable energy Company – three highly complementary businesses poised for future growth. We will continue to improve our operations and balance sheet as we make GE simpler and stronger.”

Details of the Spin-Off and Divestment

As part of the strategic review, GE plans to spin-off GE Healthcare as a separate standalone Company. GE Healthcare provides medical imaging, including contrast agents, monitoring, bio-manufacturing, and cell therapy technology, leveraging deep digital, artificial intelligence, and data analytics capabilities. Kieran Murphy, President and CEO of GE Healthcare, will continue to be at the helm of GE Healthcare and help maintain it as a GE brand. GE plans to retain 20% of the cash from GE Healthcare’s spin-off and distribute the balance 80% to GE’s shareholders in a tax-free transaction. GE expects to complete the spin-off within the next 12 months to 18 months, and is expected to make the announcements once the dates are finalized.

GE Healthcare’s revenues for FY17 were over $19 billion, with a revenue growth of 5% and a segment profit growth of 9%. Becoming an independent Company will allow it to ‘have greater flexibility to pursue future growth opportunities, react quickly to changes in the industry, and invest in innovation’.

GE also announced the decision to divest its stake in Baker Hughes. GE currently owns nearly 62.5% stake in Baker Hughes and plans to divest its stake over the next two to three years. Baker Hughes offers equipment, oilfield services, and digital solutions to oil and gas operators. The divestment will provide Baker Hughes with enhanced agility and gain market leadership in the Oil & Gas Industry

As part of the organizational restructuring, GE also plans to shrink GE Capital’s operations and help it focus primarily on supporting its core industrial businesses. Accordingly, GE plans to divest energy and industrial finance assets owned by GE Capital, valued at $25 billion, by 2020. GE plans to limit GE Capital’s capital expenditure to approximately $3 billion for FY19, and is also looking at means to reduce its insurance exposure.

The Company announced that Larry Culp, former CEO of Danaher and current Independent Director of the Company’s Board, will be the Lead Director Transition with immediate effect. He is succeeding Jack Brennan, who is completing his last term on the Company’s Board. Culp has also been appointed as the Chairman of the Board’s Management Development and Compensation Committee.

Impact of the Restructuring

Following the completion of the various transactions announced by the Company in the last year, it will have a leaner organization structure and operating system. This will lead to a smaller corporate team that will focus primarily on strategy, capital allocation, talent, and governance. The changes will help the Company to reduce its debts, have strong financials, and create value for its shareholders. The Company expects to save at least $500 million by the end of FY20 due to the changes. The Company expects to maintain a long-term A credit rating. The Company plans to cut its net debt by approximately $25 billion by FY20, and have over $15 billion as cash available on its balance sheet. The Company also expects to maintain its current quarterly dividend till it completes the spin-off of GE Healthcare, subject to the Board’s approval.

Plans for Future Growth

In the last year, the Company has announced divestments and assets sale transactions valued at over $20 billion. Going forward, the Company plans to focus on three main business segments, namely Aviation, Power, and Renewable Energy. Currently GE Aviation is a leader in the aviation industry. It is estimated that two out of every three commercial departures worldwide are powered by GE engines. GE’s power and energy businesses are covered under GE Power and GE Renewable Energy. Together they offer a wide range of energy solutions across the electricity value chain. The Company powers more than one-third of the world’s electricity via approximately 7,000 installed gas turbines. As part of its future growth strategy, the Company also plans to invest in innovative technologies like additive and digital manufacturing.

Stock Performance Snapshot

June 27, 2018 – At Wednesday’s closing bell, Baker Hughes’ stock advanced 1.42%, ending the trading session at $33.60.

Volume traded for the day: 3.54 million shares.

Stock performance in the previous three-month period – up 19.70%; past six-month period – up 4.80%; and year-to-date – up 6.19%

After yesterday’s close, Baker Hughes’ market cap was at $37.79 billion.

The stock has a dividend yield of 2.14%.

The stock is part of the Basic Materials sector, categorized under the Oil & Gas Equipment & Services industry. This sector was up 0.4% at the end of the session.

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