Investors have been losing patience with General Electric's (NYSE:GE) turnaround progress recently. Last week, the stock hit a new multiyear low following the news that GE stock will be removed from the widely followed Dow stock market index. There have also been rampant rumors about GE potentially eliminating its dividend or breaking up the company. However, in one respect at least, GE's turnaround plan is on track. General Electric continues to fetch good prices for pieces of its industrial empire that it wants to sell. Over time, asset sales will make GE easier to manage, while helping the company shore up its balance sheet. GE reaches a deal for another unit For the past few months, General Electric has been talking to potential acquirers -- both private equity firms and other companies -- about its distributed power operations. This business (part of the struggling GE Power segment) makes gas turbines that generate power on site, mainly for large factories, and includes the GE Jenbacher and Waukesha brands. On Monday, GE announced that private equity firm Advent International had won the bidding for its distributed power business. The deal was first reported on Sunday night by The Wall Street Journal. Advent will pay $3.25 billion for this unit, which had $1.3 billion of revenue last year. The sale is scheduled to close in the fourth quarter of 2018. The distributed power business is set to produce earnings before interest, taxes, depreciation, and amortization (EBITDA) of roughly 250 million euros ($292 million) this year, according to Reuters. If that estimate is accurate, then the sale price of $3.25 billion reflects a healthy valuation of more than 11 times EBITDA. One deal among many The pending deal for GE's distributed power business is just one of several $1 billion-plus divestitures that the company has agreed to over the past year. Last September, GE struck a deal to sell its industrial solutions unit to ABB for $2.6 billion. At the time, the companies said the sale would close in the first half of 2018. Earlier this month, EU regulators approved the deal, so it is likely to be completed any day now. In April, GE agreed to sell its healthcare IT business to private equity firm Veritas Capital for $1.05 billion. That deal is expected to close next quarter. And last month, GE signed a complex deal to sell its transportation business -- which specializes in building freight locomotives -- to Westinghouse Air Brake Technologies (NYSE:WAB), better known as Wabtec. General Electric will receive cash proceeds of $2.9 billion when this sale closes in early 2019, plus a 9.9% stake in Wabtec that would be worth $1.9 billion at current market prices. (GE shareholders will also receive about $7.7 billion of Wabtec stock.) GE is required to sell its Wabtec shares within three years, and it may opt to cash out even faster. Cash proceeds are starting to add up The four signed asset-sale agreements discussed here will generate cash proceeds of $9.8 billion over the next 12 months. To be fair, some of these asset sales will likely lead to taxable gains, so part of the proceeds will need to be set aside for Uncle Sam. Additionally, GE will spend a little over $3 billion later this year to buy out Alstom's interests in three joint ventures that the two companies set up several years ago. Nevertheless, even without any further asset sales -- and excluding the potential sale of GE's $1.9 billion of Wabtec stock -- General Electric should have at least $5 billion of net proceeds to use for debt reduction. Other planned divestitures such as the iconic GE Lighting business will likely add to the company's cash proceeds later this year and in 2019. Thus, investors don't seem to be giving General Electric's management enough credit. CEO John Flannery said last year that he would simplify the company and use the proceeds of its asset sales to pay down debt. He is following through on that commitment. There's no quick fix to GE's current problems, but the company is making the right moves to get healthier in the long run.<doc-sep>Given the steady drumbeat of asset sales (GE said Monday that it would sell its distributed power unit to Advent International for $3.25 billion), it is easy to lose sight of how radically the company has changed in less than a decade. On the cusp of the recession, GE 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 conglomerate.<doc-sep>
General Electric on Tuesday it will spin off its health-care business and divest its stake in oil-services company Baker Hughes, leaving the once-sprawling conglomerate focused on jet engines, power plants, and renewable energy. The changes aim to reward battered shareholders and strengthen GE's balance sheet by reducing debt, building up cash and further shrinking GE Capital, GE said. Shareholders will receive 80 percent of the value of GE Healthcare as a tax-free distribution, GE said. GE shares jumped 5.2 percent at $13.41 in premarket trading. The company will spin off the profitable healthcare unit over the next 12 to 18 months, and sell its Baker Hughes stake over two to three years, it said. The moves, which conclude a year-long strategic review, mirror moves that Wall Street analysts had called for a year ago. The remaining businesses "share similar technologies and industrial markets, in contrast to limited synergies that exist with GE Healthcare," Fitch analyst Eric Ause said in a note. The changes leave GE with some of its best- and worst-performing units. Aviation has been highly profitable, but the power business profit has tumbled as sales of plants and services have slowed, and renewable energy profit margins are in the single digits. The spinoff of its healthcare unit follows a similar move by rival Siemens, which floated its medical business as a separate company, Siemens Healthineers, in March. GE faces tough competition for medical imaging machines, which include MRI scanners and ultrasound devices, from such rivals as Philips and Siemens, as well as Asian upstarts.