The storied American company General Electric, which struggled under its own weight after growing to become a sprawling conglomerate, will divide itself into three public companies focused on aviation, healthcare and energy.
GE has spent recent years unwinding the empire created by Jack Welch in the 1980s. It was heavily damaged by the financial crisis, particularly the financial division of the company that was dislodged this year.
GE’s stock was once one of the most desired on Wall Street, routinely outperforming peers and the broader market.Credit:AP
The company has already spun off many of the products most people are familiar with, including its appliances as well as the light bulbs that it had been making since the late 19th century when the company was founded.
When the General Electric announced on Tuesday (US time) that it will spin off its healthcare business in early 2023 and its energy segment including renewable energy, power and digital operations in early 2024, it may have signalled the end of the conglomerate era.
The company hopes to find more centralised growth, and profit, by dividing itself into three companies with completely different goals and focus.
“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,” Chairman and CEO Lawrence Culp jnr said in a prepared statement on Tuesday.
Culp will become non-executive chairman of the healthcare company, with GE maintaining a 19.9 per cent stake in the unit. Peter Arduini will serve as 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 lead the aviation business along with John Slattery, who will remain its CEO.
In 2015, years after financial crises had exposed its vulnerability, GE announced a radical transformation with a plan to shed billions in assets to better focus on the company’s industrial core, namely power, aviation, renewable energy and healthcare.
Two years later Jeff Immelt, who had led the company since 2001 after taking over for Jack Welch, was replaced by John Flannery. While it had spun off its appliance division the previous year, Flannery was replaced in just one year by Culp, who envisioned a vastly different, smaller, and more stable GE.
