Umair Gaines
On August 2, 2021, General Electric (GE) completed a one-for-eight reverse stock split, reducing the number of outstanding shares from 8.8 billion to 1.1 billion. This move was part of CEO Lawrence Culp's restructuring and turnaround plan for the company, which had been struggling with weak profits, a mountain of debt, and a battered reputation. The reverse stock split was intended to make the number of shares more manageable and to boost the company's market price. As a result of the reverse stock split, GE shares began trading on a split-adjusted basis on the New York Stock Exchange under the symbol GE, with a new CUSIP number.
| Characteristics | Values |
|---|---|
| Ratio | 1-for-8 |
| Date | 2nd August 2021 |
| Affected stock | GE common stock |
| New CUSIP number | 369604 301 |
| New ISIN number | US3696043013 |
| Ticker symbol | GE |
| Number of outstanding shares before the reverse split | 8.8 billion |
| Number of outstanding shares after the reverse split | 1.1 billion |
| Share price after the reverse split | $103.60 |
| Market capitalisation after the reverse split | $113.8 billion |
| Reason for the reverse split | To reduce the number of outstanding shares to a more typical number for companies with comparable market capitalisation |
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What You'll Learn
- GE's reverse stock split reduced the number of shares from 8.8 billion to 1.1 billion
- The reverse split was part of a bigger turnaround plan to save the company
- GE's market capitalization remained unchanged at $113.8 billion post-reverse split
- GE's reverse stock split was approved by shareholders at the company's annual meeting in May 2021
- GE's restructuring process began in 2015
GE's reverse stock split reduced the number of shares from 8.8 billion to 1.1 billion
On July 30, 2021, General Electric (GE) announced that it had completed a reverse stock split of GE common stock at a ratio of 1-for-8. This meant that every eight shares of GE common stock were automatically combined into one share of GE common stock. As a result, the total number of outstanding shares of GE common stock decreased significantly, from about 8.8 billion shares to approximately 1.1 billion shares.
The reverse stock split was approved by GE shareholders at the annual meeting on May 4, 2021. GE then filed an amendment to its certificate of incorporation, which was accepted by the New York Department of State on July 30, 2021, the same day the reverse stock split was announced.
GE's reverse stock split also resulted in a proportionate reduction in the authorized shares of its common stock and a reduction in the par value of the common stock to $0.01 per share. This move by GE was aimed at reducing the number of outstanding shares to levels that better align with companies of a similar size and scope, as stated in their FAQ document about the reverse stock split.
Following the reverse stock split, GE shareholders who held their shares in certificated form with an aggregate value of more than $2,000 received a letter of transmittal from the company's transfer agent, Equiniti Trust Company ("EQ"). GE shareholders with a lower aggregate value or those holding their shares in book entry form or "street name" through a bank or broker did not need to take any action.
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The reverse split was part of a bigger turnaround plan to save the company
General Electric (GE) completed a one-for-eight reverse stock split on July 30, 2021, which came into effect on August 2, 2021. This reduced the number of outstanding GE common stock from approximately 8.8 billion to 1.1 billion. The reverse stock split was part of a bigger turnaround plan to save the company.
GE's turnaround plan involves narrowing the focus of the company's core businesses and trimming the size of its board. The company also plans to spin off its healthcare business in 2023 and its energy business in 2024. GE has been downsizing for over a decade, with a general trend since 2008 favoring divestments, resulting in steady declines in the top and bottom lines. The company plans to split into three parts: Aviation, Healthcare, and Energy. This three-way breakup is expected to help the company streamline its operations and attract higher valuations.
The turnaround plan is being led by CEO Larry Culp, who joined GE in 2018. Culp has sold off several assets to streamline the company's business and has also cut the dividend by 50%. Since Culp took over, GE shares have gained 16%, and the company's debt load has shrunk.
The reverse stock split was one of the tools used by GE to help turn the company around and make it more attractive to investors. By reducing the number of outstanding shares, the company lowered its share price, making it more affordable for a wider range of investors. This move also brought the number of shares outstanding to a level more typical of companies with comparable market capitalization.
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GE's market capitalization remained unchanged at $113.8 billion post-reverse split
On July 30, 2021, General Electric (GE) announced that it had completed a 1-for-8 reverse stock split of GE common stock, with a proportionate reduction in the authorized shares of its common stock and a reduction in the par value of common stock to $0.01 per share. This reverse stock split was approved by GE shareholders at the annual meeting of shareholders on May 4, 2021.
As a result of the reverse stock split, every eight shares of GE common stock issued and outstanding or held as treasury shares were automatically combined into one share of GE common stock. This reduced the number of outstanding shares of GE common stock from approximately 8.8 billion to approximately 1.1 billion. Despite this substantial reduction in the number of shares, GE's market capitalization remained unchanged at $113.8 billion post-reverse split.
The reverse stock split was part of a broader effort to restructure and streamline the company's business. Under the leadership of CEO Larry Culp, who joined GE in 2018, the company has been navigating a period of significant transformation. Culp has sold off several assets to simplify the company's operations and improve its financial performance.
The reverse stock split helped bring the number of outstanding shares to a level more in line with companies of comparable market capitalization. This move was intended to enhance the efficiency of GE's capital structure and improve the overall liquidity of its stock.
GE's market capitalization of $113.8 billion post-reverse split indicates that the company's overall value, as determined by the market, remained stable despite the reduction in the number of shares available for trading. This stability suggests that investors maintained their level of investment in the company, even as the number of shares they held was consolidated.
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GE's reverse stock split was approved by shareholders at the company's annual meeting in May 2021
On May 4, 2021, GE shareholders approved a reverse stock split at the company's annual meeting. The reverse stock split was part of a larger turnaround plan for the company, which had been struggling with weak profits, a mountain of debt, and a battered reputation. The 1-for-8 reverse stock split reduced the number of outstanding shares of GE common stock from approximately 8.8 billion to approximately 1.1 billion. This made the number of shares more typical of companies with comparable market capitalization.
The reverse stock split was also intended to get GE to a more manageable share range, making it easier for the company to improve its market price. While the number of shares decreased, the value of each share increased. This is because a stock split does not affect a company's market value. As a result of the reverse stock split, GE shareholders holding their shares of common stock in book entry form or in "street name" through a bank, broker, or other nominee did not need to take any action.
GE's reverse stock split was part of a restructuring process that began in 2015 under the leadership of CEO Lawrence Culp Jr., who was the first CEO to come from outside the GE ranks. Culp joined GE in 2018 and has since focused on paying off debt, selling assets, and improving cash flows by streamlining operations and cutting overhead costs. These efforts have led to a recovery for the company, with GE stock gaining 16% since Culp took over.
The completion of the reverse stock split was announced on July 30, 2021, and GE common stock began trading on a split-adjusted basis when the New York Stock Exchange opened on August 2, 2021. The stock continued to trade under the ticker symbol "GE" on the New York Stock Exchange, with a new CUSIP number, and on other exchanges under different symbols but with new ISIN numbers.
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GE's restructuring process began in 2015
General Electric (GE) has undergone a significant restructuring process since 2015, aiming to reverse its decline and restore its position as a leading industrial company. Here is an overview of the key developments in GE's restructuring journey:
2015:
GE's troubles began well before 2015, but the year marked a significant turning point. The company made a $9.5 billion acquisition of French transportation company Alstom's power business, which was later deemed a flop by GE CEO John L. Flannery. This ill-fated acquisition, coupled with the fallout from the 2008 financial crisis, highlighted GE's vulnerability and the need for a change in strategy.
2017:
GE commemorated its 125th anniversary in 2017, but the year was marked by job cuts and a significant drop in stock value. The company announced it would cut 12,000 jobs, and the stock fell 45% over the year. In November 2017, GE unveiled a broad restructuring plan, reducing its quarterly dividend to 12 cents per share.
2018:
In October 2018, Lawrence "Larry" Culp replaced John Flannery as GE's chair and CEO. Under Culp's leadership, GE embarked on a more aggressive restructuring path. He focused on reducing debt, divesting unwanted stakes, and streamlining the company's business. Culp sold off various assets, including GE's stake in Baker Hughes and the transportation unit, raising significant capital. By the end of 2018, the company had cut its dividend to 1 cent per share.
2019:
By 2019, GE's share price had rebounded, rising 53% due to the successful divestitures and capital raises. However, the arrival of the COVID-19 pandemic cut short this positive momentum. Despite the challenges, CEO Larry Culp continued to steer the company through its restructuring process, focusing on operational details and cost-cutting measures.
2021:
In May 2021, GE shareholders approved a 1-for-8 reverse stock split, reducing the number of shares from approximately 8.8 billion to 1.1 billion. This move was intended to bring the number of outstanding shares to a number more typical of companies with comparable market capitalization. The reverse stock split took effect in August 2021, and GE shares began trading at a split-adjusted price.
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Frequently asked questions
Yes, General Electric did a 1-for-8 reverse stock split.
General Electric announced the reverse stock split on July 30, 2021, and the GE common stock started trading on a split-adjusted basis on August 2, 2021.
The reverse stock split was part of CEO Lawrence Culp's bigger plan to turn the company around. The company had been struggling with weak profits, a mountain of debt, and a battered reputation. The reverse split was intended to reduce the number of outstanding shares and bring it to a more manageable range.
The reverse split reduced the number of GE's shares from approximately 8.8 billion to 1.1 billion. However, the company's market capitalization remained unchanged at $113.8 billion.
