General Electric (GE) said Wednesday it will sell its aircraft leasing business to AerCap Holdings for around $30 billion and reiterated its 2021 financial targets ahead of its investor day presentation.
GE said AerCap will buy all of its GE Capital Aviation Services, the largest portion of its GE Capital division and also known as GECAS, for $24 billion in cash, 111.5 million in AerCap shares and a further $1 billion that could be paid in either cash or notes.
The transaction would leave GE with a 46% ownership stake in the combined group, which will have around 2,600 commercial aircraft in service, store or on order from major carriers around the world.
GE also provided a 2021 financial update ahead of its annual investor day presentation, repeating that industrial revenues will grow "organically in the low-single-digit range" while earnings should come in between 15 cents and 25 cents per share. Industrial free-cash flow, GE said, is forecast in the range of $2.5 billion to $4.5 billion.
"We are on a positive trajectory in 2021 as momentum builds across our businesses and we transform to a more focused, simpler, and stronger industrial company. I remain confident we will deliver value for GE’s shareholders, employees, customers, and communities for the long term," said CEO Larry Culp. "We are excited to shift more toward offense, investing in breakthrough technologies to serve the needs of our customers and the world—for more sustainable, reliable, and affordable energy; more integrated and personalized healthcare; and smarter and more efficient flight.”
GE also unveiled plans for a 1-for-8 reverse stock split that reduce the number of shares outstanding "to a number more typical of companies with comparable market capitalization".
"Whether and when to effect it would be at the discretion of GE’s Board, at any time prior to the one-year anniversary of its 2021 Annual Meeting on May 4, 2021," Ge said.
GE shares were marked 3.5% lower in early trading Wednesday following news of the sale and the 2021 financial update to change hands at $13.52 each.
The AerCap deal, which GE said will help reduce its outstanding debt by around $30 billion, follows its 2019 sale of its aircraft financing business to private equity group Apollo Global Management for around $3.6 billon and mark yet another milestone in the ongoing GE turnaround under Culp. GECAS added $120 million in profits to the group's fourth quarter earnings, down $94 million from the same period in 2019.