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GE Opens Share Exchange Program to Spin Off Synchrony Financial

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Synchrony Financial exchange offer

On October 14, the Federal Reserve approved General Electric’s (GE) plan to spin off Synchrony Financial (SYF) into a standalone entity. This is part of GE’s plan to exit from most of its financial services (XLF) business by 2018, which we discussed earlier in this series.

On October 19, GE opened an exchange offer to GE shareholders to exchange their GE shares for those of Synchrony Financial (SYF). The exchange offer is expected to expire on November 16. The exchange ratio depends on movement in GE’s and SYF’s stock prices during the offer period, and is expected to be priced on November 13, one trading day before the offer expiry.

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Offer terms of the Synchrony deal

For GE shareholders participating in the exchange offer, each $100 in GE stock is expected to fetch $107.53 in Synchrony Financial stock, subject to an upper limit of 1.1 Synchrony Financial shares per GE share.

GE expects to buy back around $20 billion in GE stock by giving Synchrony Financial shares to GE shareholders participating in the offer. The company expects to retire around 6%–7% of its outstanding shares through the offer.

About Synchrony Financial

Synchrony Financial offers consumer financial services across the United States. The company’s offerings include consumer credit, promotional financing and loyalty programs, installment lending, and savings products. In 2014, Synchrony Financial commanded a 42% share of the private label credit cards market and provided credit cards for brands including Amazon (AMZN) and Walmart (WMT).

Apart from spinning off Synchrony Financial, GE is taking other measures to get leaner. Let’s talk about some of those recent measures in the next part of the series.

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