GE To Spin Off Healthcare Business, Sell Baker Hughes Stake

(RTTNews) - General Electric Co. (GE) said Tuesday that it plans to spin off its healthcare business into a standalone company and also sell its stake in oil services company Baker Hughes (BHGE).

The once-sprawling industrial conglomerate will now focus on the aviation, power and renewable energy sectors.

GE's shares are currently gaining more than 7 percent.

The turnaround plan was announced by GE on the same day when it will be removed from the Dow Jones Industrial Average, and be replaced by Walgreens Boots Alliance Inc. (WBA).

GE expects to generate cash from the sale of about 20 percent of its interest in the healthcare business and to distribute the remaining 80 percent to GE shareholders as a tax-free distribution. The company expects to complete these over the next 12 to 18 months.

GE plans to fully sell its 62.5 percent stake in Baker Hughes in an orderly manner over the next two to three years.

John Flannery, Chairman and CEO of GE, said in a statement, "Today marks an important milestone in GE's history. We are aggressively driving forward as an aviation, power and renewable energy company—three highly complementary businesses poised for future growth."

GE noted that with the sale of its Distributed Power, Industrial Solutions, and Value-Based Care businesses, as well as the pending combination of its Transportation business with Wabtec, the company has substantially completed its $20 billion divestiture target.

According to GE, the changes are expected to generate at least $500 million in corporate savings by the end of 2020. The company plans to reduce its industrial net debt by about $25 billion by 2020 and maintain more than $15 billion of cash on its balance sheet.

GE intends to maintain its current quarterly dividend, until the establishment of GE Healthcare as an independent entity.

GE also said its Board's independent directors have completed the previously announced lead director transition.

The directors have elected Larry Culp, former CEO of Danaher, to succeed Jack Brennan, who is completing his last term on the Board. The change is effective Tuesday.