General Electric, the American multinational corporation, announced on Tuesday that it will divide itself into three separate companies following years of poor stock performance. The company will split into distinct units focusing on aviation, healthcare, and energy. In a press release, the company stated that "General Electric plans to spin off its healthcare unit by early 2023 and its energy unit by early 2024."
Mohannad Al-Amawi, managing director at PIM Capital, said in an interview with "Al Arabiya" that the decision to split came after pressure from shareholders, issues with accounting data, and a decline in the stock price compared to the overall market performance, and it was not a surprising decision but an important transformation.
Shares in General Electric, which had already risen 55% over the past 12 months, jumped 12% in pre-market trading. CEO Lawrence Culp stated in a release: "By creating three leading global public companies, each can benefit from greater focus, dedicated capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees." He added, "We are putting our technical expertise, leadership, and global reach to better serve our customers."
The company said that the name GE will continue with the aviation company after the transition is complete, and Culp will continue to lead that unit. Thomas Edison was involved in founding General Electric in the late 19th century, and the company underwent many transformations over the past century as the U.S. economy changed, becoming a leader in appliances, jet engines, and power turbines. The group expanded rapidly in the 1980s under the late Jack Welch, entering financial services and returning to broadcasting by purchasing NBC, resulting in enviable profit growth and returns for investors along the way.
General Electric spent periods as the largest company by market value in the early 2000s, but it was hit by the financial crisis afterward. Due to the weight of its struggling financial arm, General Electric was unable to rise back to the top under the leadership of Welch's successor, Jeff Immelt. The stock was removed from the Dow Jones Industrial Average in 2018, after being one of the original members among "blue chip" stocks.
