Phase 3 of GE Exit from Electrical Industry

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ge lightingIt appears that the company that Thomas Edison founded, GE, will shortly be out of the electrical industry … or mostly.

“Phase three” of the exit, as reported by the Edison Report via a copy of an internal letter, was the announcement, that GE Lighting is officially up for sale (which has long been rumored, and multiple times).

While it is not a surprise given the changes to the lighting market and given that Sylvania (now LEDVANCE) and Philips sold their lighting businesses, it is one of GE’s final links to its past (and the letter doesn’t say if Current by GE is part of the sale or if they are keeping that aspect of the lighting business … but few have understood the relationship between GE Lighting and Current by GE).

Note – here’s a good page that highlights the confusion between GE Lighting and Current by GE.

Some thoughts:

  • GE Industrial Solutions is currently up for sale with ABB, Schneider and private equity bidding for it. It is felt that a decision will be made by the end of the month. Comments in our Phase 2 posting note that there have been meetings at some of their plants with varying amounts of information.
  • When the Industrial Solutions and Water businesses were put on the market it was said that there was a dollar amount that Jeff Immelt wanted to raise. Perhaps the Industrial Solutions deal, since round 2 bids are already in, isn’t as lucrative as needed and Lighting will help make up the difference.
  • Given that the Sylvania and Philips sales, for their lamp businesses, were for surprisingly low numbers, it’s doubtful that the deal will generate a huge sale / proceeds for GE.
  • For distributors, a sale of GE Lighting probably doesn’t mean much. Lamp sales have declined with individuals and companies moving to LEDs and the price point of LEDs continuing to decline.
  • Aside from some national chain business, GE Lighting appeared to be “challenged” in earning distribution space.
  • Someone … private equity, an Asian company, a fixture company looking to complement their offering, will buy it and “life will move on”
  • There are many sources for lamps with companies such as TCP, Satco, Eiko, Halco and others gaining share at the expense of what was “The Big 3” who have now, essentially, disappeared.
  • A beneficiary of this could be Sylvania. In talking to one distributor, he referenced the Sylvania brand name as a value. He recognizes that the company is different than it was, is now owned by MLS, but he said “they have a brand that is known by contractors and other buyers and have been the most consistent of the large lamp companies.”

It’s not an unexpected move by GE as according to people internally, it hasn’t been felt that GE executive management wants to be in the electrical industry, nor respects the company’s roots or understands the business. ¬†Perhaps new ownership of both companies will enable both companies to better support distributors and end-users, will invest into the businesses. re-energize the cultures and rekindle the innovation of Edison?

If you are a GE Lighting distributor, does the sale impact your lamp line strategy? What do you think a buyer of GE Lighting

  1. Will get (what are the benefits of buying it other than access to distribution channels) and
  2. Needs to do to grow the business

And whom do you think are likely bidders / buyers?

 

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