World’s oldest industrial giant announces split, propelling share price surge
The shares of US industrial behemoth and the globe’s oldest industrial conglomerate General Electric (GE) soared nearly 20% this week, following news of a company split.
GE shares rose 2.6% in pre-market trading on Tuesday to $111.29 per share, after jumping 16.6% to the 3.5-year maximum of $126.4 the day before.Also on rt.com Rolls-Royce goes nuclear: Aviation engine-maker to produce ‘miniature reactors’
On Monday, the industrial giant unveiled plans to spin off its healthcare, energy, and aviation businesses into separate companies. The separation will be completed in 2024, GE announced in a press release on its website.
GE Healthcare will be spun off into a stand-alone medical company in early 2023. GE will also consolidate its GE Renewable Energy, GE Power, and GE Digital divisions into a separate business unit in early 2024. The names of the two companies have not yet been disclosed.
GE Aviation, which is the company’s cash cow, making jet engines for Boeing and Airbus, will keep the General Electric name, chaired by current CEO Larry Culp. The capital structure of all three new companies is to be announced at a later date.Also on rt.com Elon Musk aims to solve Texas energy crisis
The move puts an end to years of speculation about the future of the 129-year-old industrial conglomerate pioneer, which was once one of the leading US companies, but which started to ebb after the global financial crisis of 2008. Since then, GE has been under a heavy burden of debt (nearly $103.6 billion), which put its popularity with investors in jeopardy.
However, the situation changed after Larry Culp took over as the company’s CEO in 2018. His strategy put GE on course to cutting its debt by more than $75 billion by the end of 2021 through selling assets.
According to Culp, who came up with the split idea to simplify the firm’s bloated business, each of the three new GE spin-offs will gain more opportunities for growth as individual entities, able to focus on more specific matters.
“Spins create a lot of value. These are moves geared toward making GE stronger, helping our businesses and the teams perform better,” Culp said in a recent interview with Reuters.
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