GE will become separate, publicly traded companies for its aviation, healthcare and energy businesses. The company said it hopes to spin off the healthcare business to shareholders in early 2023 and that the separation of its renewable energy and power business will occur in early 2024.
“By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors and employees,” said CEO Larry Culp in a press release.
“We are putting our technology expertise, leadership, and global reach to work to better serve our customers,” he added.
The company expects one-time costs associated with the split, including separation pay, of about $2 billion. After the spinoffs, the aviation-focused company will keep the GE name. Culp expects to remain as CEO and chairman of that company, although he will also serve as non-executive chairman of the healthcare company. The new, smaller GE will retain a 19.9% stake in that company.
Collapse of a giant
Although GE’s shares have have gained ground so far year, they have essentially matched the improvement in the broad US stock market through Monday’s close. And the stock is far below the strength it once had its glory days.
By splitting into three companies it believes it will be able to maximize value without a bygone conglomerate structure.
“Today is a defining moment for GE, and we are ready,” said Culp. “The momentum we have built puts us in a position of strength to take this exciting next step in GE’s transformation and realize the full potential of each of our businesses.”
But in doing so, GE, what was once one the most successful and powerful conglomerates in history, is officially waving goodbye to a massive behemoth that dominated electricity, lighting, aviation, television, radio, music, appliances, finance and health care.