April 24, 2024

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GE completes the three-way split, breaking with its storied past

GE completes the three-way split, breaking with its storied past

(Reuters) – General Electric on Tuesday completed its split into three companies, marking the end of an era for the industrial leader that was once a symbol of American business power.

The industrial giant's aviation and energy businesses will begin trading on the New York Stock Exchange as separate entities on Tuesday, more than a year after its health care business began trading on the Nasdaq.

The collapse is the culmination of CEO Larry Culp's efforts to breathe life into a company that has faced struggles, including the 2008 financial crisis that nearly bankrupted its most profitable business, GE Capital.

In late 2021, Culp announced the breakup that had eluded a generation of insiders after the company grew dramatically in size as it entered diversified businesses under its predecessors.

GE's importance was such that the US government deemed its financial arm “too big to fail.”

But as it moved from one crisis to another, General Electric, an original member of the Dow Jones Industrial Average, lost its place in the index in June 2018, and Culp, who took over as CEO a few months later, cut its dividend to a penny to conserve cash.

Reuters reported that he had begun informal discussion of the idea of ​​separation with advisers in 2021.

Culp, who is now CEO of GE Aerospace, will ring the New York Stock Exchange's opening bell on Tuesday, along with Scott Strazyk, CEO of Vernova Energy.

Some Wall Street industry analysts handed off coverage of General Electric to their aviation and energy counterparts, recalling coverage of a company that emerged after famed inventor Thomas Alva Edison merged Edison General Electric with a rival company to form General Electric in the late 19th century.

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Analysts now estimate the market value of GE Aerospace, which has been a cash cow for the Boston-based company, at more than $100 billion after the offering.

“With the successful launch of three independent public companies completed, today marks a historic final step in the multi-year transformation process for GE,” Culp said Tuesday.

Last month, GE Aerospace, which makes engines for Boeing and Airbus aircraft, forecast operating profits of about $10 billion in 2028 thanks to strong demand for its products and services, and said it was targeting an initial dividend of 30% of net income.

The company will trade on the New York Stock Exchange under the symbol GE. GE Vernova shares will trade under the symbol GEV.

(Reporting by Abhijith Ganapavaram in Bengaluru; Editing by Arun Kuyyur)