U.S. industrial giant General Electric will split into three different companies looking after different market sectors. According to a press release the company will be divided into separate units focused on aviation, health care and energy. GE plans to spin off the health-care unit by early 2023 and the energy unit by early 2024.
In a statement accompanying the announcement the CEO Lawrence Culp said “We are putting our technology expertise, leadership, and global reach to work to better serve our customers.”
The company expects to take a one-time charge of $2 billion related to separation and operational costs and tax costs of less than $500 million.
Scott Strazik will head the combined Renewable Energy, Power and Digital business and Peter Arduini will lead GE Healthcare, while Culp will become the head of Aviation the company said in a statement. The company also expects to reduce debt by more than $75 billion by the end of 2021, compared with 2018.
General Electric was co-founded in the late 1800s by Thomas Edison and went through several transformations over the last century as the U.S. economy changed, becoming a leader in appliances, jet engines and power turbines. The conglomerate expanded rapidly in the 1980s under the late Jack Welch, getting into financial services and back into broadcasting with the purchase of NBC, sporting enviable earnings growth and returns for investors along the way.
Despite the recent outperformance, GE shares have badly underperformed the market over the last two decades. The stock has lost 2% annually since 2009, compared with a 9% annual return for the S&P 500, according to FactSet.