GE‘s turnaround strategy is becoming clear.
On Tuesday the company announced its plan to spin off its health-care unit and separate its stake in oil services company Baker Hughes over the next two to three years. GE will focus its operations on the aviation, power and renewable energy businesses.
“Today marks an important milestone in GE’s history. We are aggressively driving forward as an aviation, power and renewable energy company—three highly complementary businesses poised for future growth. We will continue to improve our operations and balance sheet as we make GE simpler and stronger,” GE CEO John Flannery said in the release. “We are confident that positioning GE Healthcare and BHGE outside of GE’s current structure is best not only for GE and its owners, but also for these businesses, which will strengthen their market-leading positions and enhance their ability to invest for the future, while carrying the spirit of GE forward.”
GE said it will maintain its current quarterly dividend until it spins off its health-care unit. The company will then adjust the dividend “in line with industrial peers.”
GE shares rose 4.9 percent in Tuesday’s premarket session. Its stock is down 27 percent so far this year through Monday and has declined by 54 percent over the past one year.
The turnaround plan comes on the same day GE will be removed from the iconic Dow Jones industrial average, a position it has held since 1907.
—GE Chairman and CEO John Flannery will be on “Squawk on the Street” at 10:30 a.m. ET Tuesday.
