GE To Sell Most Of GE Capital Assets; Authorizes $50 Bln Repurchase Program

(RTTNews) - General Electric Company (GE) announced it will create a simpler, more valuable company by reducing the size of its financial businesses through the sale of most GE Capital assets and by focusing on continued investment and growth in its industrial businesses. The transactions are valued at approximately $26.5 billion. GE will retain its "vertical" financing businesses - GE Capital Aviation Services, Energy Financial Services and Healthcare Equipment Finance - that directly relate to its core industrial businesses.

As part of the execution of the new plan, GE announced an agreement to sell the bulk of the assets of GE Capital Real Estate to funds managed by Blackstone. Wells Fargo will acquire a portion of the performing loans at closing. The transaction is valued at approximately $23 billion.

In a separate announcement, Blackstone Mortgage Trust, Inc. (BXMT) announced that it has signed a definitive agreement to acquire a $4.6 billion commercial mortgage loan portfolio from GE Capital Real Estate. BXMT expects the acquisition to result in a stabilized $0.24 - $0.28 accretion to its annual core EPS.

Under the plan, GE expects that by 2018 more than 90 percent of its earnings will be generated by its high-return industrial businesses, up from 58% in 2014. In 2015, GE's industrial businesses remain on track for operating earnings per share of $1.10-$1.20, up solid double digits, in line with expectations.

The company said there is potential to return more than $90 billion to investors in dividends, buyback and the Synchrony exchange through 2018. The exits of the targeted GE Capital businesses should release approximately $35 billion in dividends to GE, which, under GE's base plan, are expected to be allocated to buyback.

The GE Board has authorized a new repurchase program of up to $50 billion in common stock, excluding the Synchrony exchange. GE expects to reduce its share count to 8-8.5 billion by 2018. GE also said it plans to maintain its dividend at the current level in 2016 and grow it thereafter.

The company expects approximately $16 billion of after-tax charges to be recorded in the first quarter of 2015 in connection with the plan - of which about $12 billion are non-cash. GE expects that the earnings impact of the GE Capital exits will be offset by the buyback over the exit period.