General Electric spikes after announcing plans to speed up the sale of some of its $4 billion stake in oilfield-services provider Baker Hughes
- General Electric announced Tuesday plans to accelerate the reduction of its stake in Baker Hughes, an oilfield-services provider.
- GE will sell as many as 166.2 million Baker Hughes shares, which could raise $4 billion based on Monday's closing price, according to a statement.
- CEO Larry Culp told CNBC Monday that he would cut the company's leverage by selling assets.
- Watch General Electric trade live.
General Electric jumped as much as 8% Tuesday after the company announced plans to slash its stake in the oilfield-services provider Baker Hughes.
GE will sell as many as 101.2 million Baker Hughes shares through a secondary offering and Baker Hughes has agreed to buy back another 65 million shares in a private transaction, according to a statement. Based on Baker Hughes' Monday closing price of $23.64, the total sale would raise $4 billion. After the result, GE will retain about half of the Houston-based company.
General Electric bought Baker Hughes in July 2017, merging it with all of GE's oil and gas-related businesses to create the world's second-largest oilfield service provider by revenue. GE owns 62.5% of the new entity and paid Baker Hughes shareholders a special dividend of $7.4 billion when the deal closed.
Larry Culp, who was appointed as GE's new CEO on October 1, is speeding up efforts to raise cash and reduce debt to increase investor confidence. On Monday, Culp told CNBC that his company has "no higher priority right now than bringing those leverage levels down," and that he will do so by selling assets.
"I think we've got plenty of opportunities through asset sales to do that. In the last six weeks, marks my sixth week on the job, I've heard from a lot of people across our markets, people who have interest in GE assets. And I think that's confirmation that we have quality franchises and frankly that we have options."
GE shares have been under pressures recently, trading at post-financial crisis lows after the conglomerate reported disappointing quarterly results, slashed its dividend to a penny, and said that a recent $22 billion write-down of its struggling power business was being investigated by federal regulators.
GE is down 52% this year.
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