GE breakup plan sets stage for P-E 'feeding frenzy' for assets
$GE Aerospace(GE.US$'s decision to split into three companies has private-equity firms looking to carve up GE into even more pieces, the Financial Times reports.
"We are sharpening the pencils," one executive at a large, global alternative asset manager tells FT, who sees everything other than healthcare potentially selling off for a better price in the private marketplace than when it goes public.
GE's energy unit could be sold piecemeal, with RBC analyst Deane Dray telling FT that "any business in the power portfolio is considered non-core. Those would be perfect candidates for private equity."
The unit carries low margins and is forecast by analysts at CreditSights to generate just $1.3B in combined operating cash flow this year across a "hodgepodge of detached businesses."
Other areas of opportunity for alternative asset management giants such as $Apollo Global Management(APO.US$. $Blackstone(BX.US$ , $Brookfield Asset Management(BAM.US$, $The Carlyle Group(CG.US$ and KKR are said to include GE's 45% stake in $AerCap Holdings(AER.US$ and the troubled long-term care insurance business.
"This is epochal," a P-E partner tells FT, calling GE's break-up the "death knell" of the conglomerate business strategy.
Dray's sum-of-the-parts model points to an implied valuation of ~$130/share.
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wild horse : The word "shareholders" doesn't appear in this news item.
Welcome to America.
Milenko wild horse: why should the article include the word shareholders? and what does that have to do with America?
T_shares Milenko: Don't want to speak for PPS, but for me, as a shareholder and on a shareholder forum, the point is that if there is going to be a cash-out to private equity, it is very likely that anyone with a pre reverse split basis of more than 14 or so is just going to get NOTHING other than a long term capital loss to show for their former equity interest in assets which do have significant and continuing "going concern" value. So yeah, there is a valid topic about GE SH's will be treated by a PE purchase. SH's who invested on the premise of the long-term value of some pretty nice assets.
Having to do with America? Again, individual retail investors lose assets to the aristocrat wealthy in their "walled city" investments,
EEC6iRWd4p T_shares: is the breakup shareholder approved or only board approved?
TvhXCjkODq : Jack Welch was a genius supposedly for building this conglomerate and the stock commanded a premium. Now that has completely reversed.
vYcu5FgULx TvhXCjkODq: He was always 90% hype and 10% reality and cooked the books like Gordon Ramsey. His successors have been cleaning up his mess for the past 20 years and here we are breaking up the company.
KHVgqUvpZS TvhXCjkODq: Welch was the best used car salesman GE ever had. My GE coworkers and I often joked about it. Unfortunately it wasn’t a joke.