General Electric will split into three public companies

The General Electric logo is seen in a Sears store in Schaumburg, Illinois. (Jim Young/Reuters)

General Electric, one of the most storied brands in corporate America, will split into three stand-alone companies focused on health care, energy and aviation.

Long a symbol of American ingenuity, the industrial powerhouse has put its stamp on everything from plane engines to lightbulbs. The transformation of the nearly 130-year-old conglomerate, which traces its lineage to Thomas Edison, comes after years of shedding assets to ease its massive debt load and as it attempts to redefine itself in a business landscape dominated by tech titans.

GE Healthcare is slated to be spun off in early 2023, the company announced Tuesday, while the renewables and power units will be formed into new energy business in early 2024. The remaining business, GE, will focus on aviation and be led by chairman and chief executive Larry Culp.

“The world demands — and deserves — we bring our best to solve the biggest challenges in flight, health care, and energy,” Culp said in a statement outlining the plan. “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.”

GE products have brushed against every corner of modern life: radio and cable, planes, power, health care, computing, financial services. One of the original components of the Dow Jones industrial average, its shares were once among the most widely held in the country, the embodiment of corporate prowess and steady returns. In 2007, before the financial crisis, GE was the second-most valuable company in the world, alongside ExxonMobil, Royal Dutch Shell and Toyota.

GE, at one time the biggest company by market value, has fallen out of favor with investors and struggled to evolve as the nation’s tech giants have taken up the mantle of innovation.

Apple, Microsoft, Alphabet and Amazon, whose products have become integral to the fabric of modern American life, claim market capitalizations in the trillions. But GE’s worth has been eroded by years of debt, badly timed acquisitions and underperforming operations. It now claims a market cap of $125.5 billion.

Dan Ives, managing director at Wedbush Securities, said that Wall Street sees the split as long overdue.

“Traditional stalwarts like GE, GM, IBM have all had to adjust with the times as these US companies looked in the mirror and saw the lagging growth and lack of corporate efficiency,” Ives told The Post Tuesday in an email. “It’s another chapter in the long storied history of GE and a sign of the times in this new digital world.”

GE lost its spot on the Dow in 2018, replaced by Walgreens Boots Alliance on the blue-chip index. Its stock has shed 2 percent each year since 2009; by comparison, the S&P 500 index has recorded a 9 percent annual return, according to CNBC.

https://www.washingtonpost.com/business/2021/11/09/general-electric-split/