General Electric (NYSE:GE) has announced an agreement to sell GE Capital Aviation Services (GECAS) to AerCap Holdings N.V. (AerCap) in a deal worth $30 billion. As part of the deal, GE will receive $24 billion in cash and 46% of the combined company, which is worth about $6 billion.
While GE Capital was once the conglomerate’s crown jewel, it has struggled in the wake of the financial crisis and has been a subject of attack by many investors. Now, the conglomerate is shedding one of GE Capital’s largest divisions, but registering a $3 billion loss on the sale.
Following the deal, GE will use the proceeds from the transaction and the existing cash sources to reduce debt by approximately $30 billion. However, after the $3 billion write down, it will have little impact on net leverage.
On the other hand, the sale will help CEO Larry Culp execute on his vision of a simpler, stronger GE that focuses on industrial manufacturing.
In this transaction the financial advisors to GE are PJT Partners LP, Goldman Sachs, and Evercore.