General Electric, the venerable U.S. company that was founded in the late 19th century, announced Nov. 9, 2021, that it would divide itself into three separate companies.
The three new companies will focus on aviation, healthcare, and energy.
GE has already divested the products that most Americans know the company for ñ appliances and lightbulbs.
This new effort breaks up a conglomerate that reached its apex in the 1980s under CEO Jack Welch.
GE’s aviation unit, it’s most profitable, will keep the GE name. It’s healthcare unit will be spun off in early 2023, and the energy segment that includes renewable energy, power, and digital operations will be spun off in early 2024.
During its heyday in the 1990s, GE returned 1,120.6 percent on investments, and revenue grew nearly fivefold with Welch at the helm.
“Today is a defining moment for GE, and we are ready,” said H. Lawrence Culp, Jr., GE chairman, and CEO. “Our teams have done exceptional work strengthening our financial position and operating performance, all while deepening our culture of continuous improvement and lean. And we’re not finished, we remain focused on continuing to reduce debt, improve our operational performance, and strategically deploy capital to drive sustainable, profitable growth.
“We have a responsibility to move with speed to shape the future of flight, deliver precision health, and lead the energy transition,” Culp continued. “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.”
GE Chairman and CEO Larry Culp will become non-executive chairman of the health care company, with GE maintaining a 19.9 percent stake in the unit. Peter Arduini will serve as president and CEO of GE Healthcare effective Jan. 1. Scott Strazik will become CEO of the combined renewable energy, power, and digital business. Culp will lead the aviation business along with John Slattery, who will remain its CEO.
As independently run companies, the businesses will be better positioned to deliver long-term growth and create value for customers, investors, and employees, each benefitting from:
- Deeper operational focus, accountability, and agility to meet customer needs;
- Tailored capital allocation decisions in line with distinct strategies and industry-specific dynamics;
- Strategic and financial flexibility to pursue growth opportunities;
- Dedicated boards of directors with deep domain expertise;
- Business- and industry-oriented career opportunities and incentives for employees; and
- Distinct and compelling investment profiles appealing to broader, deeper investor bases.
GE also said it is on track to reduce debt by more than $75 billion by the end of 2021.
Following the announcement, GE shares ended Nov. 9 up $2.87, or 2.7 percent, to $111.29 ñ a new high for the year.