Daily Management Review

GE to spin off GE Healthcare, get rid of Baker Hughes


06/26/2018


American multidisciplinary concern General Electric Co. (GE) will spin off its GE Healthcare business to a separate company, and also sell a stake in Baker Hughes, an oilfield services company with which GE previously consolidated its oil and gas business. This is reported by Reuters.



JefferyTurner
JefferyTurner
These changes are meant to reward shareholders and strengthen the balance of GE by reducing debt.

The 126-year-old company, once the most valuable US corporation, will separate the profitable unit of medical equipment within the next 12-18 months and sell its stake in Baker Hughes for two to three years.

The concern plans to sell about 20% of GE Healthcare, and distribute the remaining 80% of the division to its shareholders under a non-tax scheme.

"We are actively moving forward as a company focused on the aviation and energy sectors and renewable energy - these are three complementary businesses that are ready for future growth," said GE CEO John Flannery.

GE said it plans to cut its net debt by about $ 25 billion by 2020 and maintain a cash balance of over $ 15 billion.

The company, which shares have fallen by more than 50% in the past 12 months, intends to maintain the current level of quarterly dividends before the separation of GE Healthcare.

GE said that its plan to sell assets for $ 20 billion was "basically completed," leaving a "simpler and stronger" company with plans to stimulate its growth, operating profit and shareholder returns.

On Monday, GE announced the sale of an industrial gas turbine unit to the private equity fund Advent International for $ 3.25 billion.

Earlier, it was decided to exclude shares of General Electric from the Dow Jones Industrial Average due to excessive reduction in their value and a drop in their weight in the index below the allowed values.

The stock index provider S&P Dow Jones Indices LLC said that the DJIA will include shares of the largest pharmacy chain in the US Walgreens Boots Alliance instead of General Electric since June 26.

source: bloomberg.com






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