GE Continues Sell Off … GE Lighting No Longer Global

GE has been in the news for many of the wrong reasons over the past couple of years and it looks like it will continue to be for the next few years as it begins its dismantling.  The first to go was GE Industrial, which was expected. Then GE Lighting was put on the block and, until last week, there were no takers for any of it. Current powered by GE is also on the auction table.  And there is more.

GE Lighting

As many know, GE Lighting, “the legacy part of the business” as it was defined to differentiate it from Current, was put up for sale almost a year ago.  If there were / are bidders, they all have been rejected as too low.  At the time GE put it up for sale it segmented the revenues for GE Lighting and Current by GE for financial reporting reasons.  In December it was announced they were being re-combined.

So, why recombine? Are the two a package deal? Have revenues for either one, or both, declined enough to be significant and perhaps need to be masked? Did GE corporate find out that no one wants the legacy business or that Current needed a more defined lighting portfolio?

Don’t know the answer to any of the above, but they become questions in the marketplace.  And other than the name being licensed to an acquirer, distributors are left to wonder what their commitment to the line should be.  If sales continue to decline, and perhaps at a rapid rate, what becomes the value of the line to an acquirer other than a distributor list?  In this product category there are many supplier options.

And, then the announcement that GE sold its global automotive group and its GE Lighting business in Europe, the Middle East, Africa and Turkey (EMEAT) to the former president, Joerg Bauer, President of GE Lighting Hungary, who resigned in December.  And if the president buys it after it has been on the market for 6+ months, what does that say … he knows the business well and presumably would know if there had been any interest.

His announcement, on Valentine’s Day, via his LinkedIn account, stated:

I am thrilled to announce a proposed agreement to buy the GE Lighting business in Europe, the Middle East, Africa and Turkey (EMEAT), as well as its Global Automotive Lighting business, through an entity I fully own.

The proposed agreement includes GE Lighting’s Commercial and Industrial Distribution business in EMEAT, including its commercial operations, distribution relationships, manufacturing plants, business sites and employees throughout the region, as well as its Global Automotive commercial and manufacturing operations.

The organization resulting from the proposed deal would be known as the TUNGSRAM Group. It would use the GE Lighting brand during a transition period, after which it would produce and sell products under the TUNGSRAM brand (in some cases, this would occur on day 1). TUNGSRAM was acquired by GE in 1989 and has been synonymous with lighting in European markets and beyond for more than a century.

The entity I fully own would enter this proposed deal with excitement about the potential ofreinvigorating a true national brand in TUNGSRAM, the most innovative Hungarian industrial company of the last century. Inspired by this proud legacy and international recognition, we would continue to ensure innovation is front and center as we would guide the company into the future building on its strong Lighting core. Relying on the great talent and national infrastructure of the GE Lighting operations in Hungary and throughout Europe, the Middle East, Africa and Turkey, I would look forward to implementing a business plan that allows for the continued vitality of the organization, allowing the team and customers to grow in new areas, strongly interlinked with an extensive supplier network, academic and business partners and start-up eco system.

Should the deal move forward, we would combine the best of the existing organization: Diversity, compliance and global market reach – with the best of TUNGSRAM: Creativity, innovation and engineering – adding to it the agility and can-do attitude of a start-up with serious traction, while focusing on future-safe industries and technologies.

The proposed sale is subject to, amongst other things, regulatory approvals and signing of local agreements. Before entering into local agreements, where appropriate, GE will complete a consultation process with the relevant employee representatives in accordance with local law.

Should the deal reach final completion, I would be joined in the management and oversight of the proposed new business which would be headquartered in Hungary by existing regional GE Lighting executives who I know well and personally trust.

The proposed divestiture process is targeting completion by mid-2018 in a number of phases, with the Hungarian business and operations potentially transferring as soon as the beginning of April 2018. Once the deal closes, I look forward to sharing more insights on business plans and providing continual updates. Until that time, we are not involved in GE Lighting’s day-to-day operations, but will be working toward a successful transition and transfer of this iconic business – getting ready for day 1.

• The proposed agreement marks GE’s first step in divesting its Lighting segment, which includes GE’s Lighting and Current, powered by GE, businesses. Both units were announced for sale in 2017. The remaining units of GE Lighting, as well as the Current, powered by GE business, will now be marketed as part of a separate sale or sales.

For those who don’t know, GE Lighting stopped selling traditional lighting in Asia and Latin America in an announcement in September 2016 … 6-9 months prior to announcing GE Lighting was up for sale.

And some other interesting elements of note:

• In the italics, mention that Current, powered by GE, and GE Lighting North America could still be a package or sold separately
• Jim Bracken, well recognized within the industry, left GE Lighting after 38 years, to join Leff Electric.  Presumably Jim would know if there was any interest in GE that became serious (early inquiries may be handled by an M&A group and not involve staff) or maybe he knows something … with GE nowadays, one never knows.

GE Power Streamlining

And the dismantling is gaining speed.

According to ETEnergyWorld, “GE is exploring a sale of its industrial gas engine business that could be worth as much as $2 billion.”  The company reportedly has hired Citigroup to prepare a sale process.  The unit for sale makes multi-ton gas turbines that generate on-site power to keep industrial plants running. Jenbacher and Waukesha engines cover the small to mid-sized segment of GE’s power business, ranging from 100 kilowatts to 10 megawatts.

Of interest to those of us in the electrical industry, the questions are:

• Who buys GE Lighting?
• Who buys Current powered by GE?

Which then begs if there is any value them together? What happens if no one wants them or the price is so low? Is there value in the GE brand (and if so, to whom?)  Does Current cover too many areas for an electrical acquirer or does it need to go to private equity to get “refocused?” Which foreign company will buy one, or both, companies?

And will the market care given the number of options in the marketplace?

For those who have been in the industry a number of years:

• Did you ever think GE would be out of the electrical industry?
• Did you ever think none of the lighting (lamp) companies would have their traditional ownership and none of them would have their legacy names?

My how times have changed.