General Electric Company (GE - Free Report) is ready to dispose a working unit of its businessagain in the best interest of the shareholders. This time, this industrial conglomerate has agreed to divest a unit of GE Aviation — MRA Systems LLC — to Singapore Technologies Engineering Ltd. (“ST Engineering”).
ST Engineering, a well recognized integrated engineering company, primarily serves customers in electronics, land systems, aerospace and marine sectors. Its operations are spread across various nations, including Europe, the Americas, Asia and the Middle East. The aforementioned transaction will be accomplished through its U.S. subsidiary — Vision Technologies Aerospace Incorporated.
On the other hand, Maryland-based MRA Systems is one of the leading manufacturers of nacelles and braking systems for jet engines. It was acquired in the 1990s from Lockheed Martin Corp. (LMT - Free Report) . Its employee strength is approximately 800.
For General Electric, this deal — structured as a conditional share purchase agreement — will likely fetch $630 million (on cash and debt-free basis).
Completion of the divestment, likely in the first quarter of 2019, is currently subject to the fulfillment of closing conditions.
General Electric’s Restructuring Initiatives
Similar moves, directed to secure shareholders’ interests, was taken by General Electric in the past few quarters.
It’s worth noting, in order to become a high-tech industrial company, General Electric decided to restructure its business portfolio in June 2018. For this, it plans to separate GE Healthcare and turn it into a stand-alone company. Further, the company will exit oil and gas businesses by disposing its 62.5% interest stake in Baker Hughes, a GE company (BHGE - Free Report) . Beside these, GE Transportation is going to be sold to Wabtec Corporation and efforts are on track to reduce exposure in GE Capital business.
In addition to the proposed restructuring initiatives, the company will divest its Distributed Power business to Advent International, GE Healthcare’s Value-Based Care business to Veritas Capital,Baker Hughes’ Natural Gas Solutions business toFirst Reserve Corporation and Pietro Fiorentini S.p.A., and GE Capital’s Project Finance Debt Business to Starwood Property Trust, Inc. (STWD - Free Report) . Moreover, the company will acquire the Netherlands-based WMC test facilities for its Renewable Energy business.
Zacks Rank, Price Performance and Earnings Estimates
General Electric currently has a market capitalization of $110.5 billion. It presently carries a Zacks Rank #3 (Hold). This conglomerate’s share price has declined 4.4% in the past three months against 2.5% growth recorded by the industry.
In the past 60 days, the Zacks Consensus Estimate for earnings remained stable at 97 cents for 2018.
General Electric Company Price and Consensus