Industrial goods manufacturer General Electric Company GE has recently completed the divesture of the majority of GE Capital’s restaurant franchise financing assets in the U.S. The assets were sold to three separate buyers.
General Electric sold assets in the Southwest and Southeast to First Horizon National Corporation, a Tennessee-based bank with assets of approximately $27 billion. Assets in the Midwest and part of the West were sold to Wintrust Financial Corporation, an Illinois-based bank with approximately $23 billion in assets. GE Capital assets in the East were sold to Sterling National Bank, a $13-billion-asset holding bank headquartered in New York.
The transactions included about $1.3 billion in ending net investment (ENI). Since Apr 2015 to date, GE Capital has inked sale agreements worth approximately $192 billion in ENI, of which it has already completed deals worth $172 billion. By the end of 2016, the company expects to sell $200 million of GE Capital assets across the world.
The transactions are in conformity with the corporate strategy of building a manufacturing-based entity with emphasis on big-ticket items such as aviation engines, drilling machines, generators, medical equipment and scanners. With these restructuring initiatives, General Electric expects operating earnings from the industrial business to comprise over 90% of its total operating earnings by 2018, significantly up from 58% in 2014.
General Electric is actively pursuing massive restructuring initiatives in order to create a simpler and nimbler firm. From a classic conglomerate with diversified business interests in financial services, media, industrial and technology-based operations, the company is pruning its operating portfolio to focus on core manufacturing businesses with a digital edge.
In accordance with this strategy, GE Digital, an integral part of General Electric, acquired Meridium, Inc., a global leader in asset performance management (APM) software and services for asset-intensive industries. The acquisition will facilitate GE Digital to augment its comprehensive APM offering by leveraging Meridium’s expertise in cognitive analytics, reliability centered maintenance, operational risk management and asset health, as well as intelligent asset strategies.
GE Digital will utilize its Predix platform along with Meridium’s enterprise software solutions to improve the APM offering through advanced asset-centric analytics, industrial software and value-added services. This will enable it to boost the Industrial Internet for asset-centric industries such as oil & gas, power and chemicals, in order to maximize the availability of their industrial assets at lower operational costs and risks.
We remain encouraged by the restructuring endeavors of this Zacks Rank #2 (Buy) stock. Some other favorably ranked stocks in the industry include Raven Industries Inc. RAVN, Crane Co. CR and Barloworld Ltd. BRRAY, each carrying the same Zacks Rank as General Electric. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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