General Electric plans major change in portfolio
General Electric management has planned a major shift in its portfolio to concentrate on manufacturing and industrial units. GE plans to exit its interest in GE Capital and CEO Jeffrey Immelt plans to spend around $5 billion on expansion of manufacturing units. GE is also in advance talks with Blackstone Group and Wells Fargo to sell its real estate portfolio worth $26.5 billion.
CEO Immelt said that GE will concentrate on oil & gas, healthcare and aviation. The company also plans to return nearly $90 billion to shareholders. On Friday, General Electric announced buyback plan worth $50 billion. Immelt has been leading the company since 2001.
GE Stock jumped 10.8 percent to close at $28.51. Market analysts have expressed positive views about GE’s restructuring and its plans to buyback stock.
In an interview with Bloomberg, CEO Immelt said, “The timing was very good to be a seller of financial service assets. You’ve got slow growth, you’ve got low interest rates, you’ve got lots of liquidity, you’ve got search for yield.”
Fairfield, Connecticut-based GE will fund the stock buyback with sale proceeds of GE Capital. GE plans to buyback nearly 20 percent of its 10.06 billion outstanding shares.
Last year, GE sold its appliance division to Electrolux. The company also spun off its consumer credit card business into a new entity. The company has also sold its insurance division and NBC Universal.
CEO Immelt said, “We’ve been very transparent with investors since the financial crisis on GE Capital. We’re only going to do things where we could control the process and generate good returns.”
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