General Electric splits into three companies

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General Electric, the traditional American manufacturer that has struggled under its own weight after growing into a sprawling conglomerate, will split into three publicly traded companies with a focus on aerospace, healthcare and energy.

“It’s over now,” said Nick Heymann of William Blair, who has followed GE for years. “There’s no real place for that in a digital economy.”

The company has already shed the products most Americans know, including its home appliances and, last year, the lightbulbs GE had been making since the late 19th century when the company was founded.

Tuesday’s announcement marks the culmination of these efforts and splits up an empire that was founded in the 1980s under Jack Welch, one of America’s first “superstars”.

GE stock rose to be one of the most sought after on Wall Street under Welch, and consistently outperformed its competitors and the broader market. By the 1990s, it returned 1,120.6% to investment. GE’s sales grew nearly five times and the company’s value 30 times during Welch’s tenure.

But in the summer of 2001, the waning days of Welch’s reign, the stock began to stagnate. As the decade ended, GE was nearly ruined with the worst financial crisis since the Great Depression. General Electric’s flaws were exposed and the epicenter was GE Capital, the company’s financial wing.

Shares lost 80% of their value from early 2008 through the first few months of 2009 and have only recently started to recover. The stock is up 30% this year as asset sales continue, and stocks rose 2.7% in strong trading Tuesday.

GE’s most profitable aerospace division will keep General Electric’s name. GE will outsource its healthcare business in early 2023 and its energy segments including renewables, power and digital operations in early 2024.

GE chairman and CEO Larry Culp will become the non-executive chairman of the healthcare company, with GE retaining a 19.9% ​​stake in the unit. Peter Arduini will become President and CEO of GE Healthcare effective January 1, 2022. Scott Strazik will become CEO of the combined renewable energy, power and digital business. Culp will co-lead the aviation business with John Slattery, who remains its CEO.

The company announced Tuesday that it expects operating costs of approximately $ 2 billion related to the split, which will require board approval.

The Boston-based company also announced Tuesday that it would cut its debt by more than $ 75 billion by the end of the year.

Information on this article was contributed by Stan Choe of The Associated Press.


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