Another wave of sales leaves GE changed

NEW YORK — General Electric Co. is shrinking again, becoming a mere shadow of the globespanning conglomerate that it was before the Great Recession.

GE said Tuesday that it will spin off its health-care business and sell its interest in Baker Hughes, which provides drilling services to oil and gas companies.

The moves were announced as GE disappeared from the Dow Jones industrial average, replaced by a drugstore chain. GE was an original component in the Dow back in 1896 and had been a continuous member since 1907. But on Tuesday, Walgreens Boots Alliance Inc. took its spot in the stock index of 30 blue-chip companies.

The committee that picks Dow components wanted to add a health-related stock to better reflect the overall General Electric will spin off its health-care business and sell its interest in Baker Hughes, a company that provides drilling services to gas and oil companies.

economy, and one that was stronger.

The news underscored how radically GE — and the global economy — have changed in less than a decade.

GE traces its roots to Thomas Edison and the invention of the light bulb, and the company grew with the American economy. At the start of the global financial crisis in 2008, it was one of the nation’s biggest lenders, its appliances were sold by the millions to homeowners around the world, and it oversaw a multinational media powerhouse including NBC television.

The company became almost unmanageable. Former CEO Jeffrey Immelt once said its portfolio was too broad and too opaque. “One business had no idea what another business did,” he bemoaned.

Since the recession, the company has been selling assets, with the latest divestitures coming after a yearlong review by CEO John Flannery.

“Today marks an important milestone in GE’s history,” Flannery said Tuesday. He vowed to give the company more of a hightech and industrial look, and to make GE simpler and stronger by focusing on aviation, power and renewable energy — businesses that he said are poised to grow.

“We have changed many things, but the essence of GE endures,” he said on a conference call with analysts.

GE will sell about 20 percent of its health-care business and distribute the rest to its shareholders over the next 12 to 18 months. It will take up to three years to sell its two-thirds stake in Baker Hughes, valued at around $23 billion.

The company said the moves will lower its debt by $25 billion and reduce risk.

Standard & Poor’s warned that it could downgrade GE’s credit — already in junk status — by one more notch. S&P analysts said divesting the health-care business would improve GE’s balance sheet but leave the lessdiversified company more vulnerable to volatility.

Flannery vowed when he became CEO just over a year ago to divest $20 billion in assets. The company said those sales are essentially complete.