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General Electric sets healthcare division spinoff plans

December 3, 2022
Life sciences

General Electric Co. set the terms for the spinoff of its healthcare division, putting an initial value of roughly $31 billion on the soon-to-be-public company.

GE GE +0.99% said current shareholders would get one share in the new GE HealthCare Technologies Inc. for every three shares they hold in GE. The separation is set for Jan. 3 after the markets close, and the new shares will trade on Nasdaq under the symbol GEHC.

The share distribution ratio doesn’t necessarily determine the value of the spinoff when the shares begin trading. Wall Street analysts estimates vary on the value of the business as a public company.

The Boston conglomerate plans to split into three separate public companies by early 2024. Following the healthcare spinoff, it plans to separate its aerospace business from its power and renewable-energy units.

GE HealthCare, which makes MRI machines and other medical equipment, has about $18 billion in annual revenue, compared with GE’s $74.2 billion in 2021. GE’s healthcare division plans to hold an investor day on Dec. 8.

GE will distribute at least 80.1% of the division’s shares with GE retaining the rest. GE’s CEO Larry Culp will be nonexecutive chairman of the new board, and GE HealthCare CEO Peter Arduini will also be a director.

GE shares have fallen about 9% so far this year, compared with a 14.4% drop in the S&P 500 index.

Based on Wednesday’s share closing price of $85.97, GE has a market capitalization of around $93.6 billion, which would value the healthcare spinoff at about $31.2 billion. The record date for the distribution is Dec. 16.

By Thomas Gryta

Source: wsj.com

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