Changes for General Electric

General Electric Sheds Jet-Leasing Unit

General Electric (GE) has agreed to shed the largest remaining piece of GE Capital. The company is merging its jet-leasing unit called GE Capital Aviation Services with AerCap Holdings (AER) in a deal worth over $30 billion.

This is one of the largest parts of the company’s multiyear restricting plan to date. It has already sold its biotech business, its light bulb sector, and a majority stake in its oil field services business.

Streamlining Operations

GE will receive roughly $24 billion in cash and a 46% stake in the new combined company. The new company will lease more than 2,000 aircraft. GE will receive another $1 billion when the transaction closes, which is expected to happen in nine to 12 months.

With the proceeds from the deal, GE plans to pay off debts and integrate the rest of GE Capital into the company’s corporate structures. GE will focus on manufacturing power turbines, jet engines, wind turbines, and hospital equipment. “This really does mark the transformation of GE into a more focused, simpler, stronger company,” said GE’s CEO, Larry Culp.

Planning a Reverse Stock Split

GE’s board has also advised the company to perform a 1-for-8 reverse stock split. This will reduce the amount of outstanding GE stock from about 8.8 billion to 1.1 billion.

A reverse stock split means that if an investor owns 8,000 shares of GE stock worth $14 each, after the stock split they would own 1,000 shares worth $112 each. Shareholders will need to approve of the stock split at their annual meeting, scheduled for May 4.

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