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The Future Of General Electric’s Dividend After The GE Capital Sale

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If I were running General Electric, I would have chosen to spin off GE Capital to the existing General Electric shareholders as a tax-free spinoff rather than sell $150+ billion of the remaining GE Capital to outside buyers (principally Wells Fargo and Blackstone).

Spinoffs are preferable to asset sales because of tax efficiency. General Electric is going to record $16 billion in charges in connection to yesterday’s announced restructuring. Selling appreciated assets to Blackstone and Wells Fargo costs money, with estimates ranging from $4 billion to $6 billion in tax payments alone.

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