General Electric to split into three companies

• GE will be divided into aviation, health care and energy units

• Shares of the company climbed 6% in early trading on Tuesday

General Electric announced on Tuesday it will split into three companies as the company struggles for the past few years.

GE will be divided into units focusing on aviation, health care and energy, with the health care unit to start by early 2023 while the energy unit by early 2024.

Shares of the company climbed 6% in early trading on Tuesday.

“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,” CEO Lawrence Culp said in a statement accompanying the announcement. 

“We are putting our technology expertise, leadership, and global reach to work to better serve our customers.”

The name of the aviation unit will continue to remain “GE” and Culp will lead the unit as well, the company said.

Struggling conglomerate

The U.S. industrial giant was co-founded by Thomas Edison in 1800s and has since then become a leader in appliances, jet engines and power turbines. The company grew rapidly in the 1980s, getting into financial services and purchasing NBC.

Growth of GE was hit by the financial crisis in 2000s, before which it was one of the largest companies by market value.

Culp took over as CEO of the company in 2018, who sold and spun off several units to simplify business structure of GE.

“We’ve made a lot of progress, not only with with balance sheet but improving our core operations, over the last several years,” Culp said Tuesday on a call with investors and analysts. 

“But I think as we’ve seen in so many instances outside of GE over the last decade, spinning good business heightens focus and accountability.”

Shares of GE have lost 2% annually since 2009, and the company has been under high levels of debt in recent years.

The proceeds from the sale of its aviation financing unit will be used to pay down debt, the company said. 

Picture Credits: Reuters