GE targets spinoff of consumer, industrial unit

The consumer and industrial businesses have 50,000 of GE's 300,000 employees, sales of $13.3 billion and a profit of slightly more than $1 billion last year. GE Lighting invented the world's first incandescent light bulb in 1879.

Fairfield-based GE announced in May that it planned to sell or spin off its appliance business, but now says it is looking to spin off the entire unit, which includes household appliances such as dishwashers and clothes dryers as well as lighting, motors and electrical distribution.

GE, an industrial, financial services and media conglomerate, said it continues to explore all options for the consumer and industrial operations, but believes it makes the most sense to spin off the entire unit to existing shareholders, keeping its leadership teams and employees intact. The company hopes to complete the move next year.

"As we explored our options for appliances, it became clear that the fastest, most efficient step we could take in completing the transformation of our industrial portfolio would be to focus on a possible spin-off of the entire unit," GE Chairman and Chief Executive Jeff Immelt said in a statement.

"This is consistent with the strategy we have been executing to transform the GE portfolio for long-term growth and makes sense for GE shareholders," he said.

The spinoff would create a separate publicly traded company owned by GE shareholders.

"While the deal does not unlock value per se, it is a step toward improving the portfolio," Citigroup analyst Jeffrey Srague wrote in a research note.

The announcement was not a surprise and stems from GE's poor earnings in the first quarter, said Deane Dray of Goldman Sachs Group Inc. A spinoff avoids taxes associated with selling the appliance business, he said.

"We also believe GE could still pursue a sale of the stand-alone appliances, with today's announcement potentially creating a sense of urgency among potential bidders for this legacy consumer asset," Dray wrote in his report.