U.S. industrial giant General Electric (NYSE:GE) has announced that it is splitting itself into three separate publicly-traded companies following years of stock underperformance.
The company will be divided into separate units focused on aviation, health care and energy. GE plans to spin off the health-care unit by early 2023 and the energy unit by early 2024, the company said in a news release.
GE shares, which are already up 55% over the last 12 months, jumped 12% in pre-market trading today on news of the breakup.
The name General Electric will live on with the aviation company after the move is complete, the company said.
General Electric was co-founded in the late 1800s by Thomas Edison and went through several transformations over the last century as the U.S. economy changed, becoming a leader in appliances, jet engines and power turbines.
The conglomerate expanded rapidly in the 1980s under the late Jack Welch getting into financial services and back into broadcasting with the purchase of NBC, providing enviable earnings growth and returns for investors.
GE spent periods as the largest company by market value as recently as the early-2000s, but then the financial crisis hit. Weighed down by its troubled financial arm, GE was never able to climb back on top after the crisis.
GE stock was removed from the Dow Jones Industrial Average in 2018 after being one of the original members of the blue-chip average since 1896.
Despite the recent outperformance, GE shares have badly underperformed the market over the last two decades. The stock has lost 2% annually since 2009, compared to a 9% annual return for the S&P 500 during the same timeframe.
GE said the capital structures of the new firms will be announced at a later date. The company said it will use proceeds from the recent sale of its aviation financing unit to further pay down debt.
