GE, in a move to become a pure play industrial company, is exiting the financial services business by selling the bulk of the assets contained in its GE Capital unit and returning most of the proceeds from that disposition to shareholders in the form of a $50 billion share buyback.
The company will take an after-tax $16 billion charge in the first quarter of 2015 in connection with the divestiture of GE Capital. Roughly $12 billion of that charge, which includes paying taxes on repatriated earnings, is non-cash.
GE said its intent is to create a "simpler, more valuable company" by effectively disposing of a unit whose assets are equal to that of the nation's seventh largest bank.
It will do that by selling units to other financial institutions as well as portfolios of assets, including Friday's sale of its commercial real estate assets for $26 billion. GE will sell most of the assets of GE Capital Real Estate to funds managed by Blackstone and Wells Fargo.
GE will keep the financial operations that help its customers finance their purchase of equipment from GE.
-- David Faber