The company, founded in 1892, has refashioned itself in recent years from the sprawling conglomerate created by Jack Welch in the 1980s to a much smaller and focused entity. It was heavily damaged by the financial crisis.
The company said Tuesday that it will spin off its healthcare business in early 2023. The healthcare business is its third-largest segment – producing diagnostic imaging systems including magnetic resonance, X-ray, digital mammography and nuclear imaging. GE also said that it will spin off its energy segment – which includes its renewable energy, power, and digital businesses – in early 2024. It will maintain a 19.9 per cent stake in the health-care unit.
“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 Lawrence Culp Jr. said in a prepared statement.
Culp will become non-executive chairman of the healthcare company. Peter Arduini will serve as president and CEO of GE Healthcare effective January 1, 2022. 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.
Aviation is the most profitable part of GE’s business. The company produces jet engines, aerospace systems, replacement parts and maintenance services for commercial, executive and military aircraft including fighters, bombers, tankers and helicopters.
The company expects one-time separation, transition, and operational costs of approximately US$2 billion related to the split, which will require board approval.
In 2015, GE announced a radical transformation of the company, vowing to shed billions in assets to better focus on the company’s industrial core, namely power, aviation, renewable energy and healthcare.
The Boston company also announced Tuesday that it expects to lower its debt by more than US$75 billion by the end of the year.
Shares jumped more than eight per cent before the market open.