GE is splitting into three companies

GE will become separate, publicly traded companies for its aviation, healthcare and energy businesses. The company said it hopes to spin off the healthcare business to shareholders in early 2023 and that the separation of its renewable energy and power business will occur in early 2024.

Shares of GE (GE) surged as much as 17% in premarket trading on the news before retreating to about a 6% gain in early trading after the open. The stock was already up more than 25% in 2021 before the spin-off announcement.

“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,” said CEO Larry Culp in a press release.

“We are putting our technology expertise, leadership, and global reach to work to better serve our customers,” he added.

Since Culp took over GE in 2018, he has sold off assets and restructured the business in order to cut costs and lower GE’s massive debt pile. In 2016 it sold its appliance business to Chinese household goods manufacturer Haier for $5.4 billion. GE even shed the iconic light bulb unit in 2020.

Although those products were what made GE well known to the average consumer around the globe, it was the company’s mighty GE Capital unit that made it a corporate powerhouse, providing financing for businesses large and small. In March of this year it closed the books on GE Capital as a standalone unit with the sale of its aircraft leasing arm.

The company expects one-time costs associated with the split, including separation pay, of about $2 billion. After the spinoffs, the aviation-focused company will keep the GE name. Culp expects to remain as CEO and chairman of that company, although he will also serve as non-executive chairman of the healthcare company. The new, smaller GE will retain a 19.9% stake in that company.