The American industrial giant is disintegrating
The break-up marks the end of the 129-year life of the industrial giant, once America’s most valuable company and a global symbol of American commercial power.
General Electric announced that the company’s healthcare business would be disbanded in early 2023, and that the renewable energy, fossil fuel and digital power units would be transformed into an energy-focused company and disbanded a year later. The rest of the company will include General Electric.
A spokesman for General Electric said the names and brands of the detached units would be decided later.
This is the most daring step taken during Larry Calp’s tenure to make the company’s business easier. He, who took over as CEO of General Electric in 2018, focused on reducing debt and improving cash flow by integrating operations, reducing staff costs and raising money faster from customers. The move led to an improvement in General Electric’s balance sheet, putting the company on track to reduce its debt by more than $ 75 billion by the end of 2021. The company now expects to generate more than $ 7 billion in cash by 2023 and plans to sell its stake in Baker Hughes, AirCup and the health unit to reduce its debt to less than $ 35 billion by then.
“What we’re doing is building three global breakthroughs in healthcare, aviation and energy with an investment grade,” said Larry Calp, CEO of General Electric in an interview.
General Electric shares traded up 5.7 percent in the New York Mercantile Exchange, up 7.1 percent from the previous close of mid-May 27. The company said it expects $ 2 billion in separation, transfer and operating costs for the program, plus tax costs of less than $ 500 million.
According to Reuters, GE was the world’s largest company for 20 years with a market capitalization of $ 401 billion. Five years ago, the company was only able to be among the top 10 companies, and by Monday, dozens of companies with a larger market capitalization than General Electric were on the S&P 500. The company had revenue of about $ 79.62 billion in 2020, which was significantly different from the revenue of more than $ 180 billion in 2008.
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