Bloomberg and CNBC are reporting that General Electric has filed confidentially for an initial public offering of its health-care unit, GE Healthcare, moving ahead with plans to spin off its second most profitable business line. The shares rose 2.9 percent in U.S. pre-market trading on Wednesday.
GE is working with JPMorgan Chase on an initial public offering that would likely come next spring, someone familiar with the plans stated. Goldman Sachs, Bank of America, Citigroup, and Morgan Stanley are also working with GE, according to Bloomberg News. The new public company would rank among the largest in the world.
A public listing of GE’s health-care unit would follow a similar move by Siemens, which sold shares in its Healthineers business in March. The shares are up 32 percent since the IPO, valuing Siemens Healthineers AG at about 37 billion euros ($42 billion).
A newly public GE health-care company would rank among the world’s largest, Bloomberg Intelligence analyst Karen Ubelhart said in June. Based on the valuation of peer companies, the new entity could have an enterprise value, which includes debt, of $65 billion to $70 billion, Ubelhart said.
With the spinoff, GE will retreat from one of its largest and most profitable markets. GE Healthcare, which earned $3.5 billion last year on sales of $19 billion, specializes in equipment such as MRI scanners and mobile diagnostic machines. The company also has a fast-growing life-sciences division, which accounts for about a quarter of GE Healthcare’s sales.
The company originally announced its plans to spin off GE Healthcare, under the leadership of CEO Kieran Murphy, in late June. Then-Chief Executive Officer John Flannery unveiled a plan to sell 20 percent of GE Healthcare and spin off the rest to shareholders. General Electric has previously said spinning out the health unit makes sense because it allows the company to focus on its core industrial and energy businesses. However, the terms of the spin-off came into question after John Flannery was removed as chairman and CEO in October and replaced with CEO Lawrence Culp. Culp went a step further, saying he may sell an even bigger piece of GE Healthcare.
“As we announced in June, as an independent global health-care business, we will have greater flexibility to pursue future growth opportunities, react quickly to changes in the industry and invest in innovation,” GE said in an emailed statement to Bloomberg.
GE’s stock jumped more than 6 percent on the news.
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