General Electric It will be divided into three independent companies, separating the once powerful conglomerate into businesses focused on health care, energy and aviation.
The health care division will be spun off in early 2023, according to a statement released Tuesday. GE will combine its renewable energy, electrical and digital equipment businesses into a separate unit which will then be split in 2024. The remaining company will consist of GE Aviation, the company’s engine manufacturing operation.
The decision marks the most radical and significant changes made by CEO Larry Culp since taking office in 2018. The vast GE built by Jack Welch and its predecessors, with interests ranging from aircraft leasing to power plants to financial services, will no longer exist.
“What we’re doing today is creating three outstanding investment grade world leaders in healthcare, aviation and energy,” CEO Larry Culp said in an interview. “GE has led in these markets for a long time and today we are preparing for another century of leadership.”
GE shares were trading up about 8 percent in premarket trading in the US after previously soaring as high as 17 percent. GE said it expects to take a one-time charge of $ 2 billion of separation, transition and operating costs tied to the plan, plus tax costs of less than $ 500 million.
The comprehensive plan marks the end of an era in which conglomerates defined much of 20th century American companies and follows the dissolution of several other large and diversified companies as investors prefer the focus over breadth.