NEW YORK, United States — Multinational conglomerate General Electric announced Tuesday it will split into three separate, publicly-traded companies, specializing in aviation, healthcare, and energy.
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It was the latest move by the industrial giant to shore up its fortunes. Hard hit by the 2008 financial crisis, the company has undergone several downsizing and restructuring efforts by multiple CEOs, and incurred massive debt.
The Boston-based company said in a statement the split will leave the independently run businesses better positioned to “deliver long-term growth and create value” for customers, investors, and employees.
General Electric will 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 will be spun off in early 2024.
The remaining core of the company, which will retain the name General Electric, will focus on aviation.
“Today is a defining moment for GE, and we are ready,” said company chairman and chief executive Lawrence Culp, who will retain a leadership role in the new aviation group.
“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,” he said.
“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.”
The company previously shed its oil and appliance units and said it will use proceeds from the recent merger of its aircraft leasing business with AerCap to reduce its debt.
Investors embraced the news. On Wall Street, GE stock jumped 5.3 percent in electronic trading ahead of the market’s opening bell.
However, S&P Global Ratings put the company on credit watch for a possible downgrade given plans to offload the profitable healthcare arm.
“Upon the separation of GE Healthcare, we would view GE as less diversified,” the ratings agency said, noting that “in the past year, the health care segment has been more resilient.”
In contrast, the aviation sector was hard hit by the COVID-19 pandemic, forcing thousands of layoffs at the company.
And “power remains in turnaround mode,” S&P said.
“Still, the remaining aviation, power, and renewable businesses benefit from strong market positions and large scale operations” and are expected to continue to recover.
Founded at the end of the 19th century by Thomas Edison, General Electric has long been a flagship of American industry, with a sprawling presence in many sectors, from electricity transmission to finance, media, and computers.
Last month, GE reported fairly satisfactory quarterly results, benefiting in particular from strong growth in its aviation revenues.
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