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

Written by Rajesh Kumar Singh and Abhijith Ganappavaram

CHICAGO (Reuters) – General Electric Co on Tuesday completed its split into three companies, marking the end of the 132-year-old conglomerate that was once America's most valuable company and a global symbol of American business strength.

The industrial giant's aviation and energy companies began trading on the New York Stock Exchange as separate entities more than a year after General Electric spun off its healthcare business.

GE Aerospace retained the GE symbol. The power unit, GE Vernova, made its debut under the ticker symbol GEV.

GE Aerospace shares were up nearly 2% mid-afternoon. Vernova shares rose about 5%.

The breakup culminates CEO Larry Culp's efforts to turn around a company that seemed dead due to bad investments and the 2008 financial crisis that nearly bankrupted its most profitable business, GE Capital.

When Culp, the first outsider to run GE, took over in 2018, the company was struggling with weak profits and a mountain of debt. Its stock is down nearly 80% from its 2000 highs and it has lost its place in the Dow Jones Industrial Average after more than a century in the blue-chip index. The turmoil prompted GE's board of directors to fire two of his predecessors in less than two years.

Culp's mission to rescue the struggling group was made more difficult when its lucrative jet engine business fell victim to the coronavirus pandemic as global air travel dried up. However, its focus on paying down debt by selling assets and improving cash flows by streamlining operations and reducing overhead costs led to the recovery.

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GE has reduced more than $100 billion in debt and quadrupled its free cash flow since 2018. Its market capitalization has grown by about $100 billion to $192 billion.

“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.

Culp, as CEO of GE Aerospace, rang the New York Stock Exchange's opening bell on Tuesday, along with Vernova CEO Scott Strazyk.

General Electric was founded in 1892 after famous inventor Thomas Alva Edison merged Edison General Electric with a competing company. In subsequent years, this phenomenon has touched all aspects of life – from providing electricity to selling appliances to financing mortgages.

After the separation, the company will remain with its aerospace business, which makes engines for Boeing and Airbus jets, and generates more than 70% of its revenues from services.

Analysts estimate GE Aerospace's market value at more than $100 billion after the offering. It benefits from increased demand for after-sales services because delays in aircraft deliveries by Boeing and Airbus force airlines to operate older aircraft for longer.

Last month, it expected operating profits of about $10 billion in 2028.

“We expect the flywheel of GE Aerospace's engine business to set in motion decades of profitable growth,” Nicholas Owens, an equity analyst at Morningstar, wrote in a note.

(Reporting by Rajesh Kumar Singh in Chicago and Abhijith Ganappavaram in Bengaluru; Editing by Arun Kuyur and Richard Chang)

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