Tomahawk, WI 10/25/2013 (BasicsMedia) – General Electric Company (NYSE:GE) has improved its financial position greatly since it went through a very difficult time due to the financial crisis of 2008. It had to be aided by the U.S government in order to survive through the tough times brought about because of that economic crisis. Nevertheless, now things appear to be going very well for GE and the company is back to profitability. GE has announced that it intends to sell its power rental business to APR Power Energy Plc for a total of $314 million. Let us examine if this is the right move for GE or not.

GE is in Healthy Financial State

GE is in a healthy financial position right now. It has reported that it has a huge backlog of orders for 2014, and once it starts servicing them, this will help GE increase its sales, revenue and profits quite significantly in the coming years. It might be the wrong time for GE to think of selling an important part of its business such as the one involving power rentals. A better appreciation of the deal between GE and APR is possible when one takes time to understand the sort of agreement that the two companies have cobbled up recently.

APR To Gain APR Shares Worth $250 Million, and $64 Million in Cash

APR will pay General Electric some $64 million in cash. The company will receive the remainder of the $314 million through APR shares, where it intends to buy shares worth close to $250 million. In a sense, this means that GE will become of the shareholders at APR, thus allowing it to have a say on how the power rental business is run. APR will only be acquiring a unit of GE’s Power & Water business in Houston. It is not buying the entire power rental business from GE, which would have been a very difficult deal to appreciate.

APR shares have gained massively since this announcement was made that it seeks to buy a unit of GE’s power rental business. APR is the company that lit up Japan after the earthquake of 2011, through its turbines and diesel generators. It is increasing its assets in this industry through this purchase of a unit of GE’s power rental business. It already demonstrated its capabilities in Japan during the post-2011 earthquake, and I think GE is entering into some sort of partnership with a very stable and reliable company. Nothing in the deal should cause worry anyone.

GE Deal with APR Good for Both Companies

I think GE investors may be worried about the fact that the company has chosen to sell a part of its assets. If there is any opposition of this deal, then this is the only angle I think it might take. Overall, I see nothing wrong with it since GE still has a major voice in how the business is run. The deal will also earn the company some extra revenue bearing in mind the fact that the agreement with APR entitles it to receive shares worth $250 million. GE investors need to support this deal with APR since it is a win-win situation for all the concerned parties

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