GE to Sell Electrical Products Distribution Arm

General Electric Co. on Tuesday said it agreed to sell its electrical products distributor, GE Supply, to French electrical supplies distributor Rexel Inc. for $725 million.

The deal is expected to close in the third quarter, and is part of GE's strategy to focus on higher-return business segments.

Mary Anne Sudol, an industrial analyst with Caris & Co. in New York, said GE has said it would divest itself of product lines and "one of the likely places to look for that is the industrial group. This is right in pattern with what was indicated."

GE plans to use proceeds from the sale to reinvest in core operations and pay for restructuring. GE Supply will continue to distribute GE products.

Sudol said higher-return business segments of GE include the infrastructure and financial services groups. The infrastructure group includes large-scale and profitable products such as power generators, aircraft engines and locomotives.

GE Supply is located in Shelton, Conn., and had about 2,500 employees and $2.4 billion in revenue in 2005.

Rexel plans to operate GE Supply as a stand-alone company reporting to a newly created holding company that will be headed by Rexel Chief Executive Dick Waterman.

Separately, GE said that transportation company Penske Corp. has purchased an additional 9 percent limited partnership stake in Penske Truck Leasing from GE Capital Corp., bringing Penske's ownership to 30 percent. GE currently owns 70 percent of Penske Truck. Eventually, the companies each expect to own 50 percent stakes.

Shares of General Electric fell 19 cents to close at $33.26 Tuesday on the New York Stock Exchange.

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