The decision to finally break up a part of General Electric (NYSE:GE) makes the stock a screaming buy for investors. The reason is the sum of the parts of General Electric has been worth a lot more than the enterprise valuation the market has been placing on the company. I first called for a break-up of General Electric to unlock the value of the company for shareholders in this Seeking Alpha article in June 2017, which was written when Immelt announced his departure as CEO. Since then, I have written several articles on Seeking Alpha about how a break-up will benefit shareholders and just what some of the units could be worth as standalone companies.
The announced moves by GE will not happen overnight. The company expects that fully selling off its 62.5% stake in Baker Hughes General Electric (NYSE:BHGE) will occur over the next two to three years. The current market cap for the 37.5% of the Baker Hughes General Electric tracking stock that GE does not own is worth $13.5 billion. That makes the current valuation of GE's 62.5% stake worth $21.6 billion.
This cash infusion from selling the BHGE shares into General Electric should be enough to handle the financial issues surrounding the company's Capital Division and pension shortfalls. These issues have been plaguing shares of GE on the stock market. Here is a look at the easiest to understand issue, which is the pension shortfall:
