GE will divide into 3 companies with a focus on aviation, healthcare and energy

The American industrial giant General Electric will split into three companies after years of seeing that the share has performed worse, the company announced on Tuesday.

The company will be divided into its own units with a focus on aviation, healthcare and energy. GE plans to release the health service by early 2023 and the energy unit by early 2024, the company said in a press release.

The GE share, which has already risen 55% in the last 12 months, rose 12% in pre-market trading

“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. We put our technology expertise, leadership, and global reach to work to better serve our customers, “said CEO Lawrence Culp in a press release.

The name GE will live on with the airline after the move is complete, and Culp will continue to lead that unit, the company said.

General Electric was co-founded in the late 1[ads1]800s by Thomas Edison and underwent several transformations during the last century as the US economy changed, becoming a leader in appliances, jet engines and power turbines.

The conglomerate expanded rapidly in the 1980s under the late Jack Welch who began financial services and returned to broadcasting with the acquisition of NBC, with enviable revenue growth and returns for investors along the way.

GE used periods as the largest company measured in market value as late as the beginning of the 2000s, but then the financial crisis hit. Burdened by its troubled financial arm, GE never managed to climb back to the top under Welch’s successor Jeff Immelt. The stock was dumped from the Dow Jones industrial average in 2018 after being one of the original members of the blue chip average since 1896.

Despite recent performance, GE shares have outperformed the market over the past two decades. The stock has lost 2% annually since 2009, compared to an annual return of 9% for the S&P 500, according to FactSet.

The company has been plagued by high debt levels in recent years that have drawn skepticism on Wall Street. The capital structures of the new companies will be announced at a later date, GE said. The company said it will use the proceeds from the recent sale of its aviation finance unit to pay off debt.

This is breaking news. Please check back for updates.

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