Boston-based General Electric Co. plans to spin off its health care business and sell its stake in Baker Hughes, a company that provides services to the oil industry, according to the Wall Street Journal. GE plans to use the proceeds to pay down the mountain of debt piled on its balance sheet. It comes just days after GE was dropped from the leading index of the Dow Jones Industrials and replaced by Walgreens.
The news here comes a day after GE agreed to sell its distributed power unit for $3.25 billion to USA buyout group Advent. On the cusp of the recession, GE was one of the nation's biggest lenders, its appliances were sold by the millions to homeowners around the world and it oversaw a multinational media conglomerate.
General Electric, which will leave the Dow Jones industrial average on Tuesday, will sell off its distributed power business as part of its ongoing restructuring plan, the company announced Monday. "We are aggressively driving forward as an aviation, power and renewable energy company_three highly complementary businesses poised for future growth". "Today's announcement does nothing to change those commitments or our focus in creating in a stronger, simpler GE". It will take two to three years to sell its two-thirds stake in Baker Hughes, valued at around $23 billion.
GE shares closed at $12.75 on Monday, down from their high of $60 a share in August 2000. The company has shrunk dramatically since it became entangled in the financial crisis a decade ago and Flannery has vowed to shed $20 billion in assets quickly. The original Dow component will be replaced on Tuesday by Walgreens Boots Alliance to make it "more representative of the consumer and health care sectors of the United States economy", S&P Dow Jones Indices, which manages the index, said. It was an original member of the Dow Jones industrials dating back to 1896.
Its shares have tumbled by half in the past year, erasing more than $100 billion in wealth.
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