General Electric is finally letting go of its lighting business, one of the company's core and oldest segments, dating back to its original founding in 1892. The company announced that it had found a buyer for its last consumer-facing business; one which GE had been operating for more than 120 years.
The Boston-based company mentioned on Wednesday that the sale of its lighting unit is part of its divestment strategy. The business was sold to Massachusetts-based smart home management company Savant Systems for an undisclosed amount. Reports citing sources close to the deal estimate that the transaction may have been worth around $250 million.
The new owner of GE's light bulbs business specializing in providing smart home packages for the luxury market. Through the acquisition, Savant Systems will have more access to the physical equipment and tools needed to customize its lighting home integration packages. As part of the deal, Savant was able to obtain a long-term license to use GE's branding for its existing lighting products. In return, Savant has agreed to retain GE's operations in Cleveland without any alternations.
GE's business has rapidly evolved since it was founded through a series of mergers involving Thomas Edison's companies in the 1880s. While it initially had focused on its lighting products, the company has divested into other businesses, including aviation, communications, and energy in the late 1980s. Throughout the 2000s, GE had shifted its focus more towards the industrial sector, slowly letting go of its consumer products businesses.
Through a series of unfortunate events, GE managed to rack up a substantial amount of debt, which reached a peak of around $77 billion in 2017. GE's performance in the stock market also diminished, leading to its then CEO, John L. Flannery, to impose drastic measures that included the divestment of its smaller businesses.
In October 2017, Flannery promised stakeholders that he would streamline the company's business by divesting more than $20 billion worth of its businesses to both reduce cost and debt. The company's lighting business was reportedly one of the first of businesses on the chopping block, but finding the right buyer was harder than expected. Under its current CEO, H Lawrence Culp, GE is still continuing to sell off its less profitable businesses. The last sale resulted in the merger of GE's rail business with Wabtec in 2018 through a deal estimated to have been worth $11 billion. Last year, GE sold its GE Life Sciences business to Danaher Corp for close to $20 billion.
