General Electric will divide itself into three public companies focused on aviation, healthcare and energy, reports the AP. The storied American company, founded in 1892, has refashioned itself from the sprawling conglomerate created by Jack Welch in the 1980s to a much smaller and more focused entity after it was heavily damaged by the financial crisis. With Tuesday's announcement that it will spin off its health care business in early 2023 and its energy segment—including renewable energy, power, and digital operations—in early 2024, General Electric may have signaled the end of the conglomerate era. "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," Chairman and CEO H. Lawrence Culp Jr. said.
Culp will become non-executive chairman of the health care company. Peter Arduini will serve as president and CEO of GE Healthcare effective Jan. 1. Scott Strazik will become CEO of the combined renewable energy, power, and digital business. Culp will lead the aviation business along with John Slattery, who will remain its CEO. It will maintain a 19.9% stake in the health care unit. Aviation is the most profitable part of the business for the Boston company, which produces jet engines, aerospace systems, replacement parts, and maintenance services for commercial, executive, and military aircraft. It said Tuesday that it expects operational costs of approximately $2 billion related to the split, which will require board approval. It also announced that it expects to lower its debt by more than $75 billion by the end of the year. Shares jumped more than 8% before the opening bell.
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