General Electric will split into three companies focusing on energy, healthcare, and aviation, the company announced on Tuesday.
The company said the separation, to take effect in a phased approach over the next two years, will allow the businesses to be “better positioned to deliver long-term growth” as executives seek to reassure skeptical investors concerned about the billions of dollars of debt accumulated during the aftermath of the 2008 financial crisis.
“Today is a defining moment for GE, and we are ready,” CEO Larry Culp said. “Our teams have done exceptional work strengthening our financial position and operating performance.”
DOZENS OF GENERAL ELECTRIC WORKERS STAGE WALKOUT TO PROTEST VACCINE MANDATE
Culp will serve as the CEO of GE until the spin-off takes place and will subsequently lead the aviation spin-off going forward. Peter Arduini, who had previously worked at the company for over a decade and as president and CEO of Integra LifeSciences, will serve as the CEO of the healthcare company starting in 2022. Scott Strazik, who currently serves as the CEO of GE Power, will become the CEO of the combined renewable energy, power, and digital business company.
Prior to the announcement, the company had four main industrial segments: aviation, healthcare, renewable energy, and power. This was the result of changes the company made in 2018 prior to Culp becoming the CEO of the company.
The share price for GE jumped over 6% during early trading Tuesday morning following the news.
The company will execute its spin-off of healthcare in early 2023 and the renewable energy and power company in early 2024, the company said. When asked on CNBC about why the timeline is so long, Culp suggested the company is open to doing it faster.
“We’re gonna need 2022 to get ready,” Culp said. “We will do this as quickly as we can, but most importantly, we’ll do it well.”
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
GE, which is over 129 years old, was co-founded in 1892 by Thomas Edison through the merger of Edison General Electric Company of Schenectady and Thomson-Houston Electric Company. It quickly became one of the largest companies in the United States, and by 2000, it was the most valuable in the world, with a market valuation of $601 billion, or $957 billion in today’s dollars.
Following the financial crisis of 2008, however, the company began to face significant headwinds and accumulate billions of dollars of debt. Its stock price fell 42% that year, and the company subsequently made several deals that analysts considered a flop. The company has spent the last 10 years reducing its workforce and consolidating its business operations. It had approximately 174,000 employees in 2020, according to its 2020 annual report.
The company said Tuesday it was on track to reduce its debt by over $75 billion between the end of 2018 and the end of 2021.
