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GE Continues Strategic Divestments to Streamline Business

Zacks Equity Research
Updated

General Electric Company GE, a leading industrial goods manufacturer, recently announced that it has sold its lending and leasing business in Japan to Sumitomo Mitsui Finance and Leasing Company, Limited (SMFL). Alongside, General Electric also completed the sale of its lending and leasing business in Mexico to Linzor Capital Partners. Together these two transactions represent approximately $6.2 billion in ending net investment (ENI).

Additionally, General Electric announced the sale of GE Capital’s majority shares in Bank BPH’s Core Bank to Alior Bank. The transaction represents assets totaling approximately $2.1 billion in ENI. This transaction is expected to reap approximately $0.2 billion of capital for the company.

General Electric is currently streamlining its business for better long-term growth opportunities. In order to focus more on its core business activities, the company has started exiting the financial business and increased its investments in key industrial businesses through restructuring, state-of-the-art technology, and R&D initiatives.

The sale of General Electric’s Capital segment business in Japan was initiated in December, representing $5.2 billion of ENI. SMFL, the buyer of this segment in Japan, is the largest leasing company in the country. It has its business across China, Southeast Asia and the United States.

The sale of GE Capital’s Mexican business was also initiated in December, which comprises assets totaling approximately $1 billion in ENI. Linzor provides its services across Latin America.

Since Apr 2015, GE Capital has inked sale agreements worth approximately $165 billion, out of which it has completed deals worth $146 billion in ENI. The company intends to sell approximately $200 billion of GE Capital assets in ENI globally. This process is expected to be complete by the end of 2016

General Electric carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Barloworld Ltd. BRRAY, CLARCOR Inc. CLC and Carlisle Companies Incorporated CSL. All three carry a Zacks Rank #2 (Buy).

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GENL ELECTRIC (GE): Free Stock Analysis Report
 
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