Noah Esper

Staff Writer

Nle5099@psu.edu

General Electric announced that it will be splitting up into three new publicly traded companies. General Electric has a long history as a corporate conglomerate and was founded by famous inventor Thomas Edison and brought to light by infamous banker JP Morgan. General Electric was one of the first companies to make electricity available to the average consumer, and has remained a giant in the electrical and utilities market for generations. Recently, General Electric has announced that it will soon be breaking up into three new companies. It is unclear if any of these companies will maintain the General Electric name or if this is the end for the brand entirely. The three companies will all be focused on different industries. A healthcare and aviation company are being created while the remaining company will handle the electrical and utilities part of the business that GE is most known for. While this sudden breakup may come as a shock, many investors are not surprised. They see this breakup as a positive opportunity for GE to better consolidate its resources and its debt. Debt is the biggest factor behind the breakup. GE had recently required a large amount of debt, so, this breakup is a way to split the debt amongst three new companies, hopefully lessening the load. It is also believed that the three new companies’ stock value will see a great increase when compared to GE’s current valuation. The increase in stock value is due to the conglomerate discount caused by the rise of Exchange Traded Funds or ETFs. The current CEO of GE supports the breakup, with hopes that by creating more companies with a more narrowed focus, they will be better managed. To those who may be worried that this breakup will affect their current utility services provided by GE, there should be no cause for immediate concern. GE has expressed plans to first buy back many of their corporate bonds in order to consolidate the debt amongst the new companies. Even when the breakup does occur, one of the new companies will be electrical and utility focused and will likely continue GE’s current contracts and products. However, if GE does decide to ditch the name after the breakup, there will be a sentimental loss. While GE does not have the same name recognition as modern titans like Apple, Microsoft or Amazon, it has been around for a long time and has played an important part in American history. GE was one of the big corporate titans to emerge from the American Gilded Age among other companies like Carnegie Steel, or U.S. Steel, and Standard Oil, which was split up into different companies like BP or Exxon. In a way, GE breaking up could be seen as an end to an era as the once large monopolies of the past crumble to give way for new giants.