GE GE Aerospace

By Kimberly Chin 

General Electric Co. said it reached a deal to sell off part of its GE Digital business and set aside the rest in a separate company, as the conglomerate narrows its focus and scales back its software ambitions.

Private-equity firm Silver Lake, which is known for its investments in technology and media companies, agreed to buy a majority stake in ServiceMax, a GE Digital unit whose software helps with inventory management and scheduling service technicians, the companies said Thursday. Terms weren't disclosed.

GE will retain a 10% stake in the company, which it acquired for $915 million two years ago.

GE said it would form a new company, focused on industrial Internet of Things software that will be wholly owned by GE but run as an independent business. The company will start with $1.2 billion in annual software sales, and a GE representative said there are no plans to pursue an initial public offering for the independent business at this point.

GE Digital Chief Executive Bill Ruh said he will leave GE as part of the changes. A search is under way for a chief executive of the newly formed company.

Shares in GE rose 11% to $7.47 in premarket trading, though their value has fallen 62% this year through Wednesday's close.

The Boston-based company earlier this year hired an investment bank to find a buyer for key parts of GE Digital, a once-highly touted software unit based in San Ramon, Calif., The Wall Street Journal had reported in July.

GE has struggled with losses in its core power business and other problems that have forced the company to slash its dividend and break itself apart.

GE Digital was key to the strategic vision of former CEO Jeff Immelt, who left the company last year. The company built a software platform called Predix that aimed to help customers such as utilities and airlines gather and analyze data to better manage their equipment.

GE Digital was established as a stand-alone unit in 2015 to distinguish it from the company's industrial divisions. Mr. Immelt put Mr. Ruh, a former Cisco Systems Inc. executive, in charge and said his goal was to make GE a top-10 software company by 2020.

In 2016, GE Digital acquired several companies. It paid $495 million for Meridium, a Roanoke, Va., company whose software predicts when machinery might fail, and $915 million for ServiceMax, which is based in Pleasanton, Calif.

But GE Digital competes in an increasingly crowded marketplace of companies offering digital tools to control major industrial operations. Other competitors in the field include cloud-software providers such as Microsoft Corp., business-software makers like International Business Machines Corp. and startups such as C3 IoT and Uptake Technologies Inc.

GE has scaled backed the mission for GE Digital since Mr. Immelt left. The company has cut jobs in the division and said it planned to focus on software for its existing customers and core businesses, rather than catering to other industries.

Dana Cimilluca and Thomas Gryta contributed to this article.

Write to Kimberly Chin at kimberly.chin@wsj.com

(END) Dow Jones Newswires

December 13, 2018 08:43 ET (13:43 GMT)

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