Today GE (NYSE:GE) completed the separation of Synchrony Financial (NYSE: SYF), the largest provider of private label credit cards in the United States[1]. Synchrony Financial has been a part of GE Capital for more than 80 years, helping consumers finance purchases from clothing to jewelry to RVs to furniture.
GE decided several years ago to reduce the size of its financial services business. Exiting its U.S. consumer finance business (now Synchrony) was a clear choice.
Tuesday capped a nearly two-year process to split off Synchrony. It’s been a no small task after 80 years of shared systems, resources, cultures to make an independent, standalone firm.
In July 2014, GE took the first major step in the process and offered 15 percent of Synchrony to the public in what was one of the year’s largest IPOs. This allowed GE to establish Synchrony as a separately traded stock and allowed Synchrony to raise capital to stand on its own.
Following the IPO, GE and Synchrony spent more than a year building the infrastructure needed to separate.
On Tuesday, GE took the last step in the separation by completing an offer to exchange shares of GE common stock for the remaining 85 percent of shares of Synchrony Financial common stock owned by GE. Under the terms of the exchange offer, shareholders who participated in the exchange, which was oversubscribed, will receive 1.0505 shares of Synchrony common stock for each share of GE common stock accepted in the exchange offer.
The successful conclusion of the exchange offer is great news for both GE and Synchrony, the company said. GE will retire more than 671 million shares through the exchange, which will reduce our outstanding float by approximately 6.6 percent - said another way, this is the equivalent of a $20.4 billion GE share buyback.
GE said that this was an efficient way to return capital to the company while also executing on its strategy to focus on its industrial core and reduce the size of its financial businesses.
GE said that this was the largest share exchange it ever done and that the huge size and scale of the transaction resulted in a massive step forward in its transformation, not to mention positive news for both GE and Synchrony Financial shareholders.
[1] Based on purchase volume and receivables, The Nilson Report (April 2015, Issue #1067)
FAQs
Synchrony traces its roots to 1932. GE Capital Retail Bank was started during the Great Depression, providing customers a line of credit to purchase GE appliances. The lending arm remained GE Capital Retail Bank until being spun off from its parent company in June 2014.
Is Synchrony Bank still owned by GE? ›
On June 2, 2014, GE Capital Retail Bank changed its name to Synchrony Bank. Synchrony Financial is the parent company of Synchrony Bank. Synchrony Financial has more than 80 years experience in the financial sector and it's one of the largest provider of private label credit cards in the United States.
Is there a class action lawsuit against Synchrony Bank? ›
Plaintiffs in the class action lawsuit accused Synchrony of contacting consumers without their consent regarding accounts that did not belong to them. These calls allegedly violated the federal Telephone Consumer Protection Act (TCPA).
Is Capital One buying out Synchrony Bank? ›
Capital One Financial Corp. said it will buy Synchrony Financial's $9 billion portfolio of loans left over from a partnership with Walmart Inc., following months of acrimonious negotiations.
What happens to my GE stock when the company splits up? ›
Did General Electric perform a stock split? GE will will split its business into three standalone companies. This will not result in a stock split. Instead, shareholders of GE will receive a certain number of shares in the newly created companies once the spin-off is completed.
What 3 companies will GE split into? ›
After GE HealthCare, GE's aviation and energy businesses will separate in 2024. The aviation business will become GE Aerospace. The power and renewables business will become GE Vernova. That name comes a combination of verde and nova, which are respectively “green” in Spanish and “new” in Latin.
Why is Walmart suing Synchrony? ›
Walmart stated that Synchrony was taking a significant portion of its revenue and contributed to its losses. Conversely, Synchrony expressed frustration with Walmart's reduced marketing efforts aimed at selling Synchrony's credit cards.
Who is the parent company of synchrony financial? ›
Top 10 Owners of Synchrony Financial
The Vanguard Group, Inc. SSgA Funds Management, Inc. PAR Capital Management, Inc.
Who bought out Synchrony? ›
Is there a downside to joining class action lawsuit? ›
One of the dangers of joining a class action lawsuit is that you lose the right to file an individual lawsuit if the class action case fails. In addition, you cannot reject a settlement offer to which the class representatives have agreed.
Even in cases with minor damages, it may be worth your time, money, and resources to join a class action lawsuit. If you have minor injuries or other damages from a large company's negligence, these issues can affect many other people, too.
Why did I get a refund check from Synchrony Bank? ›
If you have a negative balance on your account, meaning you've paid more than you owe, future purchases will be credited until the balance is back to zero. If you maintain a negative credit balance for six months, Synchrony Bank is required to offer you a refund.
Is Synchrony Bank financially stable? ›
Yes, Synchrony Bank is FDIC insured (FDIC# 27314). The federal government protects your money up to $250,000 per depositor, for each account ownership category, in the event of bank failure.
Does Best Buy use Synchrony Bank? ›
Best Buy Home Furnishings offer customers a credit card through Synchrony Bank with a revolving credit limit to use again and again everywhere the Synchrony HOME Credit Card is accepted, including Best Buy Home Furnishings locations.
Is Walmart credit card Synchrony Bank? ›
The new, simplified rewards value proposition – 3-2-1 Save – brings even more value to the every day purchases customers make using the Walmart family of credit and prepaid cards, issued and administered by Synchrony Bank[i] (NYSE: SYF) and Green Dot Bank[ii] (NYSE: GDOT), respectively.
What does GE spinoff mean for shareholders? ›
In this spin-off, GE distributed to its stockholders approximately 80.1% of the outstanding shares of GE HealthCare common stock. Holders of GE common stock received one share of GE HealthCare common stock for every three shares of GE common stock held as of the close of business on the record date, December 16, 2022.
Should I sell or hold GE stock? ›
General Electric has received a consensus rating of Buy. The company's average rating score is 2.91, and is based on 10 buy ratings, 1 hold rating, and no sell ratings.
What is the prediction for GE stock? ›
General Electric Co (NYSE:GE)
The 17 analysts offering 12-month price forecasts for General Electric Co have a median target of 88.00, with a high estimate of 97.00 and a low estimate of 75.00. The median estimate represents a +5.99% increase from the last price of 83.03.
What will happen to GE stock after spinoff? ›
With the spin-off, GE has decided to separate a portion of their business and allow that separated portion to exist and trade as its own company, GEHC. How will this impact my holdings? Your total number of GE shares will remain unchanged and you will receive 0.333333 shares of GEHC for each GE share held.
What part of GE does China own? ›
It has been majority owned by Chinese multinational home appliances company Haier since 2016.
...
GE Appliances.
| Trade name | GE Appliances |
|---|
| Products | Home appliances |
| Owners | Haier (90%) KKR (10%) |
| Number of employees | 12,000, including 6,000 at Appliance Park |
| Parent | Haier |
9 more rowsThe purpose of the reverse stock split was to reduce the number of our outstanding shares of common stock to levels that are better aligned with companies of GE's size and scope and a clearer reflection of the GE of the future, not the past.
What was the old name of Synchrony Bank? ›
Synchrony Financial (formerly GE Capital Retail Finance) offers private label and co-branded Dual Card™ credit cards, promotional financing and installment lending, loyalty programs and FDIC-insured savings products through Synchrony Bank.
When did GE start declining? ›
2008: GE in Crisis
Losses by the GE Capital financial segment nearly sank the company during the Great Recession. 15 Warren Buffett stepped with a preferred investment lending his reputation to GE's operations, at a price. 16 But GE's troubles didn't end with the financial crisis.
Why did GE reverse split? ›
"The purpose of the reverse stock split is to reduce the number of our outstanding shares of common stock, and to increase the per share trading price of our stock to levels that are better aligned with companies of GE's size and scope and a clearer reflection of the GE of the future, not the past."
What is GE finance called now? ›
We're GE Capital | GE Capital.
