Rajesh Kumar Singh and Abhijeet Ganapavaram
CHICAGO (Reuters) – General Electric completed its split into three companies on Tuesday, marking the end of a 132-year-old conglomerate that was once the most valuable U.S. corporation and a global symbol of American business power.
The industrial giant’s aerospace and energy businesses began trading on the New York Stock Exchange as separate businesses, more than a year after GE spun off its healthcare business.
GE Aerospace retained the GE symbol. GE’s energy division Vernova debuted under the ticker GEV.
Shares of GE Aerospace were up about 2% midday. Vernova rose in price by about 5%.
The breakup was the culmination of CEO Larry Culp’s efforts to revive a company that had looked all but dead due to poor investments and the 2008 financial crisis that nearly bankrupted its most profitable business, GE Capital.
When Culp, the first outsider to lead GE, took the helm in 2018, the company was struggling with weak profits and massive debt. Its shares have fallen nearly 80% from their 2000 highs and have lost their place in the blue-chip stock index after more than a century. The turmoil prompted GE’s board of directors to oust his two predecessors in less than two years.
Culp’s task of rescuing the struggling conglomerate became even more difficult when its lucrative jet engine business fell victim to the coronavirus pandemic as global air travel ground to a halt. However, its focus on paying down debt through asset sales and improving cash flow by streamlining operations and cutting overhead has started a recovery.
Since 2018, GE has reduced debt by more than $100 billion and quadrupled free cash flow. Its market capitalization rose by about $100 billion to $192 billion.
“The successful launch of three independent public companies is complete, and today marks the historic final step in GE’s multi-year transformation,” Culp said in a statement Tuesday.
Culp, as CEO of GE Aerospace, rang the opening bell of the New York Stock Exchange on Tuesday along with Vernova CEO Scott Strazik.
GE was founded in 1892 after famed inventor Thomas Alva Edison merged the Edison Company. General Electric (NYSE:) Collaboration with a competitor. In subsequent years, this affected every aspect of life – from supplying electricity to selling household appliances and financing mortgages.
The split will leave it with an aerospace business that makes engines for Boeing (NYSE:) and Airbus aircraft and generates more than 70% of its revenue from services.
Analysts estimate GE Aerospace’s market value after the spin-off to be more than $100 billion. It is benefiting from a surge in aftermarket demand as delivery delays on Boeing and Airbus planes force airlines to keep older planes running longer.
Last month, the company forecast operating profit of about $10 billion in 2028.
“We expect GE Aerospace’s engine business flywheel to deliver decades of profitable growth,” Nicholas Owens, an equity analyst at Morningstar, wrote in a note.