General Electric (NYSE: GE) has announced plans to separate into three independent public companies focused on aviation, health care and energy sectors through tax-free spinoffs.
The Boston-based industrial conglomerate said Tuesday it will spin off its GE Healthcare business in early 2023 and keep a 19.9 percent stake in the health care company upon the deal’s completion.
GE Power, GE Renewable Energy and GE Digital subsidiaries will merge to form one company focused on the energy sector and pursue a tax-free spinoff in early 2024.
After the second spinoff, GE will become an aviation company to be led by GE Chairman and CEO Lawrence Culp and retain other assets and liabilities, including run-off insurance operations.
Culp will serve as nonexecutive chairman of GE Healthcare upon its spinoff and will continue to lead GE as chairman and CEO until the second spinoff’s completion.
“By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees,” Culp said.
He added that the company remains focused on reducing debt, deploying capital to drive growth and improving operational performance while accelerating efforts to “shape the future of flight, deliver precision health, and lead the energy transition.”
Effective Jan. 1, Peter Arduini, president and CEO of Integra LifeSciences (Nasdaq: IART), will become president and CEO of GE Healthcare. GE Power CEO Scott Strazik will serve as CEO of the combined entity composed of renewable energy, power and digital businesses. GE Aviation President and CEO John Slattery will continue to serve as CEO of the business segment.
GE said it expects to reach debt reduction of more than $75 billion by the end of 2021 and incur about $2 billion in one-time separation, operational and transition costs and less than $500 million in tax costs with regard to the spinoff transactions.
Paul, Weiss, Rifkind, Wharton & Garrison is serving as GE’s lead legal counsel in the transaction, while Evercore and PJT Partners are acting as lead financial advisers. GE also secured financial advice from BofA Securities and Goldman Sachs and legal advice from Gibson, Dunn & Crutcher.