Uncertainty abounds as an underperforming General Electric engages in financial engineering to increase its overall value to shareholders by splitting the enterprise into three companies focused on healthcare, aviation, and power.
According to the company…
GE announced its plan to form three industry-leading, global public companies focused on the growth sectors of aviation, healthcare, and energy, by:
1. Pursuing 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 percent; and
2. Combining GE Renewable Energy, GE Power, and GE Digital into one business, positioned to lead the energy transition, and then pursuing a tax-free spin-off of this business in early 2024.
3. Following these transactions, GE will be an aviation-focused company shaping the future of flight.
As independently run companies, the businesses will be better positioned to deliver long-term growth and create value for customers, investors, and employees, with each benefitting from:
• Deeper operational focus, accountability, and agility to meet customer needs;
• Tailored capital allocation decisions in line with distinct strategies and industry-specific dynamics;
• Strategic and financial flexibility to pursue growth opportunities;
• Dedicated boards of directors with deep domain expertise;
• Business- and industry-oriented career opportunities and incentives for employees; and
• Distinct and compelling investment profiles appealing to broader, deeper investor bases.
The implication for employees is unclear as each division will seek to maximize value by eliminating underperforming segments, burdensome layers of management, and seek expansion opportunities.