GENERAL ELECTRIC CO. $27 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.2 billion; Market cap: $275.4 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.ge.com) plans to spin off its North American retail finance business as a separate company.
This business, part of its GE Capital subsidiary, provides credit card loans through a variety of retailers, such as Wal-Mart and J.C. Penney. It also loans money directly to consumers. GE will hang on the international portion of the retail finance business.
The spinoff is part of the company’s plan to cut GE Capital’s assets to half of what they were prior to the 2008 financial crisis.
GE will sell 20% of the new company’s shares through an initial public offering in 2014. As a separate firm, this business will have a market cap of $16 billion to $18 billion.
After the initial offering, GE will give its shareholders the chance to swap their GE stock for shares in this new company.
GE is a buy.
