- General Electric CEO Larry Culp said the company would move as quickly as possible to divest the company but would focus on doing it right.
- The industrial giant announced Tuesday that it would split into three companies focused on aviation, health care and energy.
- “We know the focus and accountability always increases as we watch spin elsewhere,” Culp said on CNBC’s “Squawk on the Street.”
General Electric CEO Larry Culp said management would split into three companies as soon as possible, but he would focus on getting it right.
The industrial giant announced Tuesday that it would break into three businesses focused on aviation, health care and energy. The news sent shares up nearly 6% in morning trading.
“We know the focus and accountability always increases as we watch spin elsewhere,” Culp said on CNBC’s “Squawk on the Street.”
“We think we have an opportunity here with increased capital allocation and more strategic flexibility as well,” he said.
The aviation unit will keep the name GE, after the health care unit is shut down in early 2023 and the energy unit by early 2024. Culp told CNBC’s David Faber that the health care business is the first to take off because the company still has some preparation since what it considered an initial public offering for the division a few years ago.
GE also announced Tuesday that it expects to have paid off $75 billion in debt from its 2018 peak by the end of the year. Kalp said repaying the debt helped make partition possible.
Some investors and Wall Street analysts have been pushing for the company’s breakup for years. The stock has underperformed the market for the past two decades. According to Culp, another benefit of the spinoff may be an investor base that is better prepared for those three businesses.
Under Culp, GE is selling parts of the company, such as its home appliance business and its financial services arm, in an effort to simplify its business. Culp will hold his title as GE’s president and CEO until the energy unit closes, when he will become head of the aviation business. He will also serve as non-executive chairman of the health care business after its spinoff.
Culp said GE will continue to update investors and employees as the process progresses.
“There are more questions than we have today,” said Kalp.