End of an era as US conglomerate General Electric plans a 3-way split

General Electric (GE), one of America’s oldest conglomerates, is planning to break itself into three companies in one of the biggest shake-ups in its 129-year history.

It will divide itself into entities focusing on energy, healthcare and aviation. The first new company, GE Healthcare, will be spun off in 2023 with GE retaining a 19.9 per cent stake.

An energy-focused firm combining its renewable energy, power and digital businesses will be separated in 2024, with the remains of the original company focusing on aviation.

The three firms will have ‘strategic and financial flexibility to pursue growth opportunities,’ GE said. 

‘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,’ said chief executive Larry Culp.

He added: ‘We remain focused on continuing to reduce debt, improve our operational performance, and strategically deploy capital to drive sustainable, profitable growth.’

The break-up marks the end of an era for GE, which was once America’s largest company.

Its share price has suffered several setbacks over the last decade and it is currently worth around 62 per cent less than it was before the 2008 financial crisis, which exposed several pitfalls in the sprawling business that made everything from jet engines to TV programmes.

Since then, several bosses have sought to streamline it to resurrect its share price and placate growing investor discontent. 

Culp accelerated this process after taking the helm in 2018, selling more assets and focusing more intensely on trying to cut the debt pile.

GE expects to achieve a debt reduction of £55billion between 2018 and 2021. Culp’s proposals to split the business, however, are a much bolder move than his previous efforts and those of his predecessors.