Company Update (NYSE:GE): General Electric Company Completes Divestment of Power Generation Assets to Ansaldo Energia
General Electric Company (NYSE:GE) closed its transaction to divest select power generation assets to Ansaldo Energia. GE first announced the transaction in September 2015 when the European Commission and U.S. Department of Justice approved GE’s acquisition of Alstom’s Power and Grid businesses on the condition that GE would commit to divest segments of Alstom’s heavy-duty gas turbine business, pending regulatory approvals.
The final purchase price of the deal is €120 million, and today’s announcement confirms that the transaction has met all required regulatory approvals to close. Under the terms of the deal, GE has divested the following assets to Ansaldo Energia:
- Alstom’s GT26 (an F-class gas turbine) product line for new unit sales.
- Alstom’s GT36 technology development program, which upon completion would result in an H-class gas turbine product.
- Services contracts for 34 GT26 units. The remainder of Alstom’s gas turbine installed base (approximately 720 units) remains with GE.
- In addition, to address concerns raised by the Department of Justice and European Commission regarding competition for the service of GE gas turbines, GE has divested Alstom’s Power Systems Manufacturing (PSM) business, which provides after-market parts and services for other OEMs’ equipment. GE will receive a license to the PSM intellectual property used to offer after-market services for non-GE gas turbines.
This transaction close marks another important milestone as GE continues to integrate Alstom’s Power and Grid businesses and transform into the world’s premier digital industrial company. (Original Source)
Shares of General Electric are up half percent in pre-market trading. GE has a 1-year high of $31.49 and a 1-year low of $19.37. The stock’s 50-day moving average is $28.38 and its 200-day moving average is $27.76.
On the ratings front, GE has been the subject of a number of recent research reports. In a report issued on January 26, Oppenheimer analyst Christopher Glynn reiterated a Hold rating on GE. Separately, on January 25, William Blair’s Nicholas Heymann reiterated a Buy rating on the stock and has a price target of $38.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Christopher Glynn and Nicholas Heymann have a total average return of 13.7% and 1.8% respectively. Glynn has a success rate of 71.0% and is ranked #1 out of 3675 analysts, while Heymann has a success rate of 52.9% and is ranked #1503.
The street is mostly Bullish on GE stock. Out of 10 analysts who cover the stock, 7 suggest a Buy rating and 3 recommend to Hold the stock. The 12-month average price target assigned to the stock is $32.00, which represents a potential upside of 9.5% from where the stock is currently trading.