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Waiting Game

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Waiting Game

UPDATE: Just one day after lightED published this feature article, GE announced the sale of Current, powered by GE.

 

With no indication of the sale of GE’s ‘Current, powered by GE’ business in sight, what’s the plan for this industry player?

 

Last November, and under the leadership of then-CEO John Flannery, GE announced its decision to put its ‘Current, powered by GE’ division up for sale as part of the company’s reorganization (lightedmag.com/report-current-powered-by-ge-will-be-sold/).  After sharing its intention to sell Current by year-end 2018, the 126-year-old company’s plan at the time was to resume as an entity focused solely on the areas of power, aviation, and healthcare (the latter of which they’ve since announced their intention to spin off).

With GE’s October 1, 2018 appointment of new CEO Larry Culp (former CEO of industrial manufacturer Danaher), however, and no indications that the company is anywhere close to meeting its previous year-end sale prediction for its lighting businesses, what does this mean for GE Lighting and Current?

Following, M&A expert Ari Fuchs, Director at The DAK Group (www.dakgroup.com), a Rochelle Park, NJ-based investment bank that focuses on business sales, mergers, and acquisitions exclusively with middle market companies, offers insights on the status of the sale and how distributors should approach their relationship with GE Lighting and Current.

lightED: Can you share any insights on if/when a GE sale is going to happen?  What if any indicators have (or haven’t) you seen that might shed any light on this development?

Fuchs: The overall objective behind GE’s realignment hasn’t changed — the company still needs to right-size its operations to re-position itself for success and continued profitability in the long-term. In my view, the restructuring of GE, including the sale of GE Lighting and Current, powered by GE, remains a big part of the overall plan because it will enable GE to narrow its focus on its three core verticals – aviation, power, and renewable businesses.

lightED: Now that GE has announced a new CEO (again), will that likely delay the sale?

Fuchs: As GE’s new CEO, Larry Culp will be charged with executing the same restructuring plan established by the company’s board of directors. What will likely be different is how the plan will be executed. I imagine that Culp’s task of rethinking the execution strategy will likely delay the sale. That said, when compared to GE’s larger holdings in the oil and gas (Baker Hughes) and healthcare (GE Healthcare) sectors, which are expected to command purchase prices in the billions of dollars, its lighting businesses (which analysts expect will generate $600-800 million in value) likely aren’t as high on the priority list and, as a result, their sale may be delayed.

lightED: What does it mean for a company in general when it misses a publicized ‘deadline?’ Will the value of a company like Current drop as demand to buy it goes down?

Fuchs: Current’s energy management solutions are at the forefront of the industry. As the broader IoT marketplace continues to expand, Current’s solutions will continue to gain traction and will help build value for the enterprise. If Current continues to fire on all cylinders, its value will not diminish – it may even increase.

lightED: Any tips you can offer electrical distributors in terms of the way they should interact with/approach this company? Or are there any expectations they should have in general with a company in the throes of an impending sale?

Fuchs: I can appreciate that those doing business with GE Lighting or Current may feel uncomfortable given the uncertainty surrounding their sale. That said, my sense is that the business continues to operate in the ordinary course. GE’s customers and vendors are critical to its ongoing success and GE will likely do everything in its power to ensure that its stakeholders are serviced properly in order to preserve and enhance the ongoing value of the enterprise.

 

For more information, contact Ari Fuchs at afuchs@dakgroup.com.

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Susan Bloomis a 25-year veteran of the lighting and electrical products industry. Reach her at susan.bloom.chester@gmail.com.

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