General Electric Co. (GE) said, they will shed most of its finance unit and return $90 billion to its shareholders. In the statement GE said, they want to become a simple manufacturer rather than a cumbersome business group.
In a statement of Friday GE revealed their restructuring plan, where they want to buy back $50 billion of its shares and sell $30 billion in real estate assets. They are planning to complete their restructure within the next 2 years. The market analysts had confirmed that GE`s stocks went up 8.5 percent after the announcement. In a statement Tom Donino, Co-Head of the equity trading at the First New York Securities said, “The stock has been under-owned by institutional investors, and that’s going to change now.”
GE said, their repurchase program will be partly funded by the $35 billion they are going to get back from GE Capital. GE said, they have $10.06 billion in shares outstanding and they want to reduce it as much as 20 percent by 2018. GE also confirmed that they are planning to shed $275 billion in GE Capital assets, which is going to include their Synchrony Financial credit card unit. They also confirmed that in the near future they will sell their consuming business assets in an amount of $165 million. The GE financial officials also confirmed that they are planning to retain $90 billion in finance assets, which is related to their selling of products such as jet engine, medical equipment, power generation and electrical grid gear.
It was previously reported that GE has forecasted earnings of $1.70 to $1.80 per share for this year, including 60 cents from GE Capital. But GE officials said, though shedding of GE finance will reduce their earnings by 25 percent, it will be recovered by stock buybacks. In another statement Blackstone Group LP and Wells Fargo & Co had confirmed that they are buying assets of GE Capital Real Estate for about $23 billion.