How Comcast 'Stole' NBCUniversal From General Electric
"This transaction allows us to significantly increase the cash we plan to return to shareholders in 2013, to approximately $18 billion, and to continue to invest in our industrial business," Jeff Immelt, GE Chairman and CEO, said in a statement. GE is now authorized to repurchase $35 billion in stock, with plans to buy back $10 billion in shares this year.
"We think the news affirms that the enormous self-help potential at GE is starting to be realized, and this should drive share price outperformance," Julian Mitchell, an analyst with Credit Suisse wrote of Tuesday's deal.
"GE has substantial non-core assets, and it is encouraging to see these being divested at a decent price," Mitchell added, while stressing the disposal oif NBCUniversal may not be dilutive to GE's earnings given the company's expected increase in capital returns.
Simply put, buying NBCUniversal may commit Comcast to a new phase of growth and expansion. In contrast, General Electric is selling down assets and paring its expansive operations. While shareholders in both companies may win, Comcast investors may have gotten the upper hand.
On news of the deal, Comcast shares rose over 6% to $41.40 in early Wednesday trading, a new record high for the company. General Electric shares gained over 3% to $23.34, reaching a five-year high in after-hours trading.
-- Written by Antoine Gara in New York