General Electric Company (GE - Free Report) , a leading industrial goods manufacturer, recently announced the strategic sale of GE Capital’s Franchise Finance U.S. hotel business to Western Alliance Bank, a subsidiary of Western Alliance Bancorporation (WAL - Free Report) .
The deal comprises assets totaling approximately $1.4 billion in ending net investment (ENI) and majority of General Electric’s hotel business employees. This business ideally provides real estate financing for hotel properties.
Alongside, the company has also agreed to sell its Canadian Franchise Finance business, to a different buyer. This sale comprises ENI worth $0.3 billion along with most its employees.
General Electric is 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.
These transactions will realign the corporate strategy of the company to 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 aggregate over 90% of its total operating earnings by 2018, up from 58% in 2014.
Since Apr 2015, GE Capital has inked sale agreements worth approximately $161 billion, out of which it has completed deals worth $138 billion. The company intends to sell approximately $200 billion of GE Capital assets 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 - Free Report) and Carlisle Companies Incorporated (CSL - Free Report) . Barloworld and Carlisle each hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>