Group restructuring
General Electric plans to split into three companies
Will industrial groups get so big at some point that they get in their own way? Siemens and Philips are constantly selling off parts of their companies or taking them public. Now the US competitor GE is breaking itself up. The goal: more growth.
The US industrial group General Electric wants to split into three companies. The result will be companies for aviation, medicine and a further company comprising the renewable energy, power generation and digitalization businesses, as the Group announced in Boston on Tuesday. The share price rose by around 17% in pre-market trading.
GE Healthcare is to be spun off by the beginning of 2023 and will focus exclusively on precision medicine. GE itself intends to retain 19.9 % of the shares. The spin-off of the combined energy business is to be completed by the beginning of 2024. The remaining group will then be a company focused on aviation. GE builds aircraft engines.
Approval from the committees and authorities is still pending. GE estimates the costs for the restructuring at around 2 billion dollars and less than half a billion dollars in taxes. The management hopes that the split will lead to stronger long-term growth. Similar paths have already been taken by competitors Philips and, above all, Siemens.
This means that the ongoing corporate restructuring at GE is coming to a grand finale. The company has been planning for some time to focus more on its industrial business and reduce its debt. To this end, the management announced the merger of its aircraft leasing division Gecas with its Irish competitor Aercap in the spring, for example, which is expected to generate 23.9 billion dollars for GE. The split-up will enable GE to cash in on its stakes in Aercap and the oilfield services provider Baker Hughes.
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