General Electric to Get Chopped into 3 Companies
Posted on 11/09/2021
This is what giving up looks like. General Electric (GE) is cutting up the conglomerate into three global public companies focused on the growth sectors of aviation, healthcare, and energy. GE plans to pursue a tax-free spin-off of GE Healthcare, creating a pure-play company at the center of precision health in early 2023, in which GE expects to retain a stake of 19.9%.
GE plans to combine GE Renewable Energy, GE Power, and GE Digital into one business, positioned to take advantage of energy transition themes and then pursuing a tax-free spin-off of this business in early 2024.
After all these spin-offs, GE will be an aviation-focused company shaping the future of flight. Aviation would retain the GE name and Culp as CEO. Following the spin-off transactions, GE will retain other assets and liabilities of GE today, including run-off insurance operations.
GE Chairman and CEO H. Lawrence Culp, Jr. is taking on the bloated GE conglomerate that was once prized by former GE CEO Jack Welch and then handled “poorly” by Jeff Immelt. Under Welch, GE spent years building a business empire in the 2000s, but the financial crisis of 2008 impacted GE Capital and its other finance businesses. Through the transition, GE hopes to monetize its stakes in AerCap and Baker Hughes, prioritizing further debt reduction.
Advisors
Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as lead legal counsel. Evercore and PJT Partners are the lead financial advisors to GE on the transaction. GE also received legal advice from Gibson, Dunn & Crutcher LLP and financial advice from BofA Securities and Goldman Sachs.
