(Bloomberg) -- General Electric Co. is speeding plans to pare its stake in Baker Hughes with a deal that would raise almost $4 billion at current prices. The shares of both companies climbed.
GE will sell as many as 166.2 million shares in the oilfield-services provider through a secondary offering and a stock repurchase by Baker Hughes, the companies said in a pair of statements Tuesday. That would be worth about $3.9 billion based on the closing price Monday of Baker Hughes. GE will retain about half of the Houston-based company.
Larry Culp, GE's new chief executive officer, is accelerating efforts to raise cash as pressure mounts on the beleaguered company to reduce debt levels. The shares are languishing at a nine-year low as weak demand for gas turbines, heavy debt and federal accounting probes stoke one of the deepest slumps in GE's 126-year history.
"This starts the long term separation," said Luke Lemoine, an analyst at Capital One. "Given the dynamics around GE, they definitely want to see it done."
GE rose 2.5 percent to $8.19 at 9:41 a.m. in New York. Baker Hughes advanced 1.8 percent to $24.07.
The Baker Hughes deal furthers GE's push to streamline its portfolio and focus on aviation, power-generation equipment and renewable energy. But the timing is far from optimal, with the pact coming after a month of declines in oil prices. Baker Hughes closed Monday at its lowest price in 16 years.
Under the agreement, the companies agreed on a release from restrictions that previously prevented GE from disposing of shares of Baker Hughes until next year. GE, based in Boston, holds a 62.5 percent stake in Baker Hughes.
(Updates shares in fifth paragraph.)
--With assistance from Simon Casey.
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