General Electric will reduce its stake in Baker Hughes to a slight majority position, the company announced Tuesday, bringing in much-needed cash for the embattled industrial conglomerate.
The sale of Baker Hughes stock will bring GE's stake to just over 50 percent in the oil field services company, down from 62.5 percent. With up to 166 million shares in the offering, the full sale would see GE get about $4 billion in cash in the fourth quarter if executed near Baker Hughes' latest stock price of about $24 a share.
"The agreements announced today accelerate that plan in a manner that mutually benefits both companies and their shareholders," GE chairman and CEO Larry Culp said in a statement.
GE shares rose 7.8 percent in trading Tuesday, closing with their best day since April 2015. The jump comes a day after the stock slipped below $8 a share for the first time since the financial crisis.
Culp told CNBC on Monday that he feels the urgent need to reduce the company's leverage, saying he will do so through asset sales. GE shares have been under steady pressure since the company reported disappointing third-quarter earnings and an expanding federal investigation into the company's accounting practices.
The Baker Hughes stake sale comes as the second action by Culp to level the company's balance sheet since taking GE's helm at the beginning of October. Culp slashed the company's quarter dividend to a penny a share in his first move as CEO. He acknowledged that the cut likely caused regular investors to flee the stock.
GE negotiated a release from a previous lock-up period so it could sell Baker Hughes shares. The previous lock-up was set to last until July 2019. The release allows GE to perform this sale, accelerating the plan the company laid out in June. A new lock-up period has begun, with GE needing to wait 180 days before selling any more Baker Hughes shares.
The company will continue toward eventually selling its full stake in Baker Hughes.