Multinational conglomerate General Electric Co (GE) yesterday announced that it would split into three separate, publicly traded companies in the latest move by the industrial giant to shore up its fortunes.
GE is to spin off its healthcare and energy businesses, and the remaining core of the century-old company founded by Thomas Edison would focus on aviation.
The Boston-based company said in a statement that the split would leave the independently run businesses better positioned to “deliver long-term growth and create value” for customers, investors and employees.
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General Electric is to spin off GE Healthcare in early 2023, with the parent company expecting to retain a 19.9 percent stake, the statement said.
It would then combine three divisions — GE Renewable Energy, GE Power and GE Digital — into a single business that is to be spun off in early 2024.
The remaining core of the company, which is to retain the name General Electric, is to focus on aviation, whose future would be tied closely to Boeing Co, one of its major clients.
“We have a responsibility to move with speed to shape the future of flight, advance precision health and lead the energy transition,” said GE chairman and CEO Lawrence Culp, who is to retain a leadership role in the new aviation group.
He said the new entities would “benefit from greater focus, tailored capital allocation and strategic flexibility to drive long-term growth and value.”
Culp was appointed head of GE in October 2018 in an attempt to raise the bar, including pledging to alleviate the company’s debt.
The company on Tuesday restated its goal of reducing the debt load by US$75 billion from the end of 2018 and the end of this year.
Investors embraced the news. On Wall Street, GE shares were up nearly 4 percent at midday before retreating to close 2.7 percent higher on Tuesday.
“After years of debt reduction, restructuring and the implementation of a decentralized business model, these businesses are ready to stand on their own with the expectations of more consistent results,” Third Bridge analyst Peter McNally said.
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