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General Electric restructures, splits into 3 public companies

General Electric restructures, splits into 3 public companies
General Electric restructures, splits into 3 public companies

General Electric, the Boston-based American multinational conglomerate, has reportedly announced that the company is splitting into three individual publicly companies; each focusing on healthcare, aviation, and energy.

According to reports, the industrial giant will spin off its healthcare and energy business units, while the remaining core of the company will focus on aviation. The company stated that the split will help it improve its position of the aforementioned individual businesses and deliver long-term growth and value for their investors, customers, as well as employees.

In an official statement released by the enterprise, the company restated its goal of reducing its debt load of more than $75 billion from end of 2018, to end of 2021. Following the news of the split, GE shares went up as much as 4 percent at midday on Wall Street.

GE Healthcare will be spun off by early 2023, with the parent company expected to retain 19.9% stake, claims the official statement.

Following that, GE Renewable Energy, GE Digital, and GE Power will be combined into a single business, which would then be spun off by early 2024.

The remaining core of the company will retain the name of General Electric, focusing on aviation and maintain close ties with Boeing, one of its major clients.

Lawrence Culp, chairman and CEO of GE, who will retain a leadership role in the aviation group, stated that the company possesses the responsibility of making speedy progress the three domains; effectively shaping the future of flight, leading the energy transition, and advancing precision health.

Culp added that with the three individual divisions, GE will benefit from better focus, customized capital allocation, and strategic flexibility.

General Electric, founded by Thomas Edison in 1889, is known as a pioneer in American industry, holding a strong presence in various sectors ranging from electricity to media. Due to certain risky investments in commercial real estate during the 2008 financial crisis, the company incurred severe financial losses and amassed a massive debt, leading to it being dropped from the Dow Jones Industrial Average in 2018, over 111 years after being one of the original components of the Wall Street index.

Source credit: https://www.businesstimes.com.sg/consumer/general-electric-to-split-into-3-companies-in-latest-restructuring

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Sunil Jha

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