General Electric Co. said Monday it will swap $2.8 billion in Lockheed Martin Corp. preferred stock it owns for two Lockheed businesses and cash, giving GE a gain to offset charges for a broad restructuring.
The $1.3 billion gain will cover the costs of reorganizing some of GE’s industrial businesses.
Although Lockheed will gain $300 million from the transaction, the agreement also will force the defense contractor to make an accounting change for its $11 billion purchase of Northrop Grumman Corp. that will reduce earnings over the next few years.
For GE, the agreement lessens the financial blow a big charge would have on earnings in the next few quarters.
GE will receive Lockheed businesses that make aircraft engine parts and distribute computers, plus a stake in Lockheed’s Globalstar communications venture and $1.5 billion of cash in the form of a note. The transaction is tax-free to both companies.
