Public Health

GE CEO Larry Culp says it will move as quickly as possible to complete the split

General Electric CEO Larry Culp said Tuesday that management will break it down into three companies as soon as possible but will focus on getting it right.

The industrial giant announced earlier in the day that it would split into three business areas with a focus on aerospace, healthcare and energy. The news sent the stock up about 6% in morning trading.

“We know that when it comes to spins, there is always a growing focus and accountability elsewhere,” said Culp in CNBC’s Squawk on the Street. “Here, too, we see the opportunity for a sharper allocation of capital and greater strategic flexibility.”

The aviation division will retain the name GE after spinning off the health division in early 2023 and the energy division in early 2024. Culp told CNBC’s David Faber that the healthcare business is the first to be spun off because the company is still doing some of the preparation when they considered an IPO for the business a few years ago.

GE also announced Tuesday that it expects to have paid off $ 75 billion in debt by the end of the year from its 2018 high. Culp said the debt settlement helped make the separation possible.

Culp also said the healthcare business is facing some arrears while the aviation division is in the midst of recovery from the pandemic.

“Overall, we cannot complain about this demand environment,” he said.

Some investors and Wall Street analysts have been pushing for the company’s liquidation for years. The stock has underperformed the market over the past two decades. Another benefit of the spin-offs could be an investor base better aligned with these three companies, according to Culp.

Under Culp, GE sold portions of the company – such as its home appliance business and its competitive financial services business – to simplify its business. Culp will hold his titles as chairman and CEO of GE until the spin-off of the energy business, at which point he becomes head of the aviation business. He will continue to serve as the non-executive chairman of the healthcare business after the spin-off.

Culp said GE will keep investors and employees informed of the progress of the process.

“Today there are far more questions than we have answers,” said Culp.

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