General Electric (GE) has announced its intention to create three independent industry-leading, global, public companies in the aviation, healthcare and energy sectors. It will achieve this through pursuing a tax-free spin-off of GE Healthcare, creating a pure-play company at the centre of precision health in early 2023, in which GE expects to retain a stake of 19.9 percent. It will also combine GE Renewable Energy, GE Power, and GE Digital into one business where it will be positioned to lead the energy transition, and then pursue a tax-free spin-off of this business in early 2024.
Subsequent to these transactions, GE will then be an aviation-focused company intent on shaping the future of flight. The company will be focused and de-risked through strategic portfolio actions including the recent GECAS transaction, resulting in a simpler, stronger and more focused high-tech industrial company. GE will expect to achieve greater than US$75 billion of gross debt reduction from the end of 2018 through the end of 2021. I
In today's portfolio of businesses, GE is on track to reduce debt by more than US$75 billion by the end of 2021 and is now on track to bring its net-debt-to-EBITDA ratio to less than 2.5x in 2023. GE will also continue to drive operating improvements for sustainable profitable growth, and the company now expects to achieve high-single-digit free cash flow margins in 2023. As a result, GE is in a strong position to execute this plan to form three well-capitalized, investment-grade companies. (£1.00 = US$1.36 at time of publication).
