Sunday 21st October 2018

    GE's Fall Has Been Accelerated by Two Problems. Most Other Big Companies Face Them, Too - HBR



    The General Electric story, of a long-proud initial member of the Dow Jones Industrial Average falling out of that index -- and appearing to be in competitive free fall -- provides a powerful illustration of two effects we see throughout today's corporate world: clueless, but deep-pocketed, activist investors and mergers and acquisitions folks masquerading as strategists.
    GE's fall accelerated on October 25, 2015, with activist hedge fund Trian announcing a $2.5 billion equity investment in GE stock, one that made it a top 10 shareholder. GE stock was trading at $25.47 at the time of announcement, with a dividend of $0.92 per share. Trian announced that with its help, GE could look forward to a stock price in the $40-$50 range by 2017, and threatened a proxy battle unless GE put Trian cofounder Ed Garten on the board. In June 2017 longtime CEO Jeff Immelt resigned under unrelenting Trian and shareholder pressure, and John Flannery took over as CEO. Four months later Garten joined the board.

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