Nelson Peltz's Trian takes $2.5 billion stake in General Electric

Mon Oct 5, 2015 7:12pm EDT
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By Lewis Krauskopf

(Reuters) - Activist investor Nelson Peltz's fund has bought a $2.5 billion stake in General Electric Co, adding fresh pressure on the U.S. conglomerate to pull off its plan to shift away from finance operations toward its industrial roots.

Shares of Dow industrials component GE rose 4.5 percent to $26.60 on Monday after Peltz's Trian Fund Management disclosed its roughly 1-percent stake, and said the stock could be worth $40 to $45 per share by the end of 2017.

Trian, which said its biggest-ever investment also makes it a top-10 GE shareholder, said it wanted GE to cut costs to expand operating margins, explore more share buybacks including by taking on new debt, be disciplined in its acquisitions and consider ways to further scale back GE Capital.

But Trian said it would not seek a board seat, backing the "transformation" already under way at GE. Peltz said Chief Executive Jeff Immelt and GE "share much common ground with Trian."

Immelt, in a statement, welcomed Trian's investment.

"All it does is act as a further catalyst to make sure GE stays on track with the plans they have in place,” said Charlie Smith, chief investment officer at Fort Pitt Capital Group, which owns about 1.2 million GE shares.

Peltz, Smith said, is a "sharp operator. We’re glad to see him in the picture."

With Monday's jump, GE's market capitalization rose to about $268 billion, trailing only a few companies, such as Apple, Microsoft, ExxonMobil and Wells Fargo & Co.   Continued...

Nelson Peltz, one of the principles of the Trian Group, addresses the audience at the H.J. Heinz Co. annual shareholder's meeting in Pittsburgh, Pennsylvania August 16, 2006. REUTERS/Jason Cohn