The U.S. conglomerate General Electric announced Tuesday that it is planning to fully separate itself from Baker Hughes in a strategic move that involves a new direction to shrink the company.
GE said it plans to divest its equity ownership position in Baker Hughes.
The company had contributed $7.4 billion to the partnership that was finalized in July 2017, in which it owned 62.5 percent and Baker Hughes owned 37.5 percent interest in the new firm called BHGE.
To shrink itself further, GE said it would monetize 20 percent of its subsidiary, GE Healthcare, and distribute the remaining 80 percent shares to GE Healthcare shareholders tax-free.
The company said it would instead focus on aviation, power and renewable energy, 'creating a simpler, stronger, leading high-tech Industrial company,' according to the statement.
The strategic moves are planned to generate at least $500 million in corporate savings by the end of 2020, the statement said.
'General Electric also plans to reduce industrial net debt by approximately $25 billion by 2020 and maintain more than $15 billion of cash on the balance sheet,' it added.
In the past 12 months, GE shares declined 54 percent in the New York Stock Exchange. However, after Tuesday's announcement, they climbed to as high as $13.88 -- an 8.9 percent increase.
Officials announced last week that the company would be dropped from the Dow Jones Industrial Average as of Tuesday after trading for 111 years.
By Ovunc Kutlu
Anadolu Agency
ovunc.kutlu@aa.com.tr