LONDON (ShareCast) - (Sharecast News) - Struggling US conglomerate General Electric is to raise $4bn by selling a stake in oil services firm Baker Hughes, as it looks to slash debts and return to growth.
GE said it would sell up to 101m shares via a secondary offering and that Baker Hughes would buy around 65m shares from it. GE is Baker Hughes' largest shareholder with a 62.5% holding.

Based on Baker Hughes' closing share price of $23.64, the deal is set to raise around $4bn for heavily-indebted GE.

In October, GE - which is facing probes by the Securities and Exchange Commission and Department of Justice over its accounting practices - posted a quarterly loss of $22.8bn after a dire performance at its power equipment business and a $22bn write down.

Its debt at the end of third quarter was $114bn.

On Monday, new chief executive Larry Culp said GE had "no higher priority right now" than reducing debt. Culp took over on 1 October with a mandate to turn the 126-year-old business around, primarily by selling assets. He has already slashed the dividend, to just 4 cents a share, but this is his first significant deal.

Announcing the Baker Hughes sale, Culp said: "Earlier this year, we announced our intent to pursue an orderly separation from Baker Hughes. The agreements announced [on Tuesday] accelerate that plan in a manner that mutually benefits both companies and their shareholders."

Analyst at RBC Capital Markets said of the deal: "We view this as being a long-term positive. However, it will still be an overhang until at least May 2019."

Shares in GE have tumbled over the last two years, sliding from around $20 in November 2016 to finish the session at $7.99 on Monday, the first time they had closed below $8 since the financial crisis.

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