GE Divests JV Stake to Comcast - Analyst Blog

By Zacks | February 13, 2013 AAA

General Electric (GE) recently sold its remaining 49% equity stake in the NBCUniversal (NBCU) joint venture and the NBCU floors in 30 Rockefeller Center to Comcast Corporation (CMCSA) for $18.1 billion, including $12.0 billion in cash, $4.0 billion in guaranteed debt, and $0.7 billion of preferred stock. General Electric already has business relationships with Comcast. In Dec 2009, General Electric reduced its holding in NBCU from 80% to 49% with Comcast as the majority partner. The proceeds from the transaction were utilized to make acquisitions in Energy and Oil & Gas businesses.

The strategic move is aimed at returning more cash to shareholders and focusing more on its industrial business. The company has currently increased its share repurchase authority to $35 billion, out of which approximately $23 billion is yet to be fulfilled. With significant cash from the divesture, General Electric intends to accelerate its share repurchase program to $10 billion in 2013.  

Additionally, the company expects pre-tax gain of approximately $1 billion in 2013. Also, the company expects the cost savings to exceed the previous target of $2 billion in 2014. The gains from this sale will enable General Electric to accelerate its restructuring plans and provide further momentum to margin expansion.

General Electric is one of the most diversified technology and financial service corporations in the world, competing with industry big wigs such as Crane Co (CR) and Federal Signal Corp (FSS). Its segments include Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Home & Business Solutions, and GE Capital.

General Electric currently has a Zacks Rank #4 (Sell).

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