General Electric CEO Larry Culp’s latest comments to CNBC about GE Healthcare could indicate an “outright sale” is among the options under consideration, according to a leading industry analyst.
Culp called GE Healthcare a “tremendous” franchise, which has “flexibility” in terms of the planned spinoff. “We could preserve our tax-free spin status while selling up to 49.9%,” Culp told CNBC’s David Faber.
“I think [Culp] is weighing all options including the outright sale of the business or parts of it,” Scott Davis, chairman and CEO of Melius Research, told CNBC. Davis, who personally owns GE shares, maintains a buy rating on the stock with a $21 per share price target.
Danaher, where Culp was CEO from 2000 to 2014, would “love” to own the life sciences business of GE Healthcare, Davis added. “As for the diagnostic equipment, that is less clear,” he said, stressing it would be “a very large deal.”
When asked for further comment, GE directed CNBC to Culp’s comments earlier. On the Oct. 30 postearnings call, Culp indicated flexibility around GE Healthcare.
GE Healthcare is a cash cow, throwing off $3.4 billion in profit last year. The unit accounted for 15.8% of General Electric’s total 2017 sales and contributed 43.2% to GE’s operating profit last year.
Culp, 55, replaced John Flannery as chairman and CEO on Oct. 1 after the board reportedly became frustrated with the slow pace of change at the struggling industrial conglomerate.
Shortly after the leadership change, both GE and GE Healthcare had told CNBC they were “committed to establishing Healthcare as a separate independent entity.”
