General Electric Co (GE) has filed confidentially for an initial public offering of its healthcare unit, people familiar with the matter said, moving ahead with plans to spin off its second-most profitable business line.
The industrial conglomerate is working with Goldman Sachs Group Inc, Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co and Morgan Stanley on the planned listing, said the people, who asked not to be identified as the details are not public.
A public filing is likely next spring, they said.
A GE representative declined to comment on plans for the health unit.
“As we announced in June, as an independent global healthcare 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 e-mailed statement.
Goldman Sachs, Bank of America, Citigroup and JPMorgan declined to comment. A representative for Morgan Stanley did not have an immediate comment.
A public listing of GE’s healthcare unit would follow a similar move by Germany’s Siemens AG, which sold shares in its Healthineers business in March. The company’s shares are up 32 percent since the IPO, valuing Siemens Healthineers AG at about 37 billion euros (US$42 billion).
A newly public GE healthcare 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 US$65 billion to US$70 billion, Ubelhart said.
With a spin, GE will retreat from one of its largest and most profitable markets. GE Healthcare, which earned US$3.5 billion last year on sales of US$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.
Still, healthcare has drawn scrutiny from some GE investors, who argue that it does not fit well with GE’s primary business of making industrial equipment, such as jet engines and gas turbines. Former CEO Jeffrey Immelt, in particular, was criticized for the costly 2004 acquisition of British medical company Amersham PLC.
GE is moving away from the market as it tries to narrow its focus, boost cash and stem one of the deepest slumps in its 126-year history. It agreed in April to sell a trio of health-information businesses for US$1.05 billion. It is possible that GE could pursue alternatives to an IPO for its healthcare unit, too.
The separation effort picked up pace in June, as then-CEO John Flannery unveiled a plan to sell 20 percent of GE Healthcare and spin off the rest to shareholders. After he was ousted in October amid mounting problems in the power division, successor Larry Culp went a step further, saying he might sell an even bigger piece as part of the push.
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