What was a surprise, however, what that Sweden's Electrolux (ELUXY) agreed to pay $3.3 billion in cash, or what seems like a king's ransom, for a business that was suffering from commodity pricing, among other things. It's a steal of a deal for General Electric.
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So with its stock trading around $26 and down nearly 8% on the year to date, now is the perfect time for investors to buy. These shares are a sure bet to reach $35 in the next 12 to 18 months. General Electric would only need to grow its revenue at a long-term rate of 4% to 5%.
The century-old appliance unit wasn't carrying its weight. Although that segment accounted for roughly 6% of General Electric's revenue, it produced less than 2% of total profits, and revenue was rapidly eroding. With less than 4% in operating margin, cutting its losses is a smart strategy. General Electric believes it can record a gain of 5 cents to 7 cents per share once the deal closes.
For General Electric, which has promised to get back to its industrial roots, unloading appliances on Electrolux allows GE to kill two birds with one stone: CEO Jeff Immelt get an extra $1.3 billion cash infusion while General Electric can now focus its attention on international growth.