Longing for spin-offs, and certainly not only on Wall Street: in recent days, in addition to the Americans General Electric e da Johnson & Johnson, Japan’s Toshiba and CNH Industrial itself made the big announcement, which was immediately appreciated by the market.
The multinationals they expressed the desire to break up in two, if not in three separate groups, listed on the stock exchange.
The roundup of announcements was inaugurated by the American industrial giant GE, a historic piece of the corporate puzzle of Made in USA. The group, co-founded by Thomas Edison under the name ‘Edison Electric Light Company’ in 1878, it announced on 9 November a plan to split into three divisions, which will focus on aviation, health care and energy.
The spin-off of energy assets will take place in particular by the beginning of 2023, with the creation of the energy division expected by the beginning of 2024.
This is how GE’s number one, the CEO, commented on the decision Lawrence Culp:
“The three leading global industry companies, listed on the stock exchange, will each benefit from increased attention, of a targeted capital allocation, and strategic flexibility that will support long-term growth and value for customers, investors and employees. We are deploying our technological expertise, our leadership and our global influence to better serve our customers ”.
The Economist on the GE case: breaking latest news of a turbulent expansion. Now the break up
In commenting on the GE revolution, just today The Economist has published an article, highlighting the epochal significance of the move:
“Perhaps the most extraordinary feature of General Electric in its 129-year history is the fact that the group has reflected the main characteristics of American big business – reads the article – Most of its history has been the breaking latest news of a turbulent expansion, and then of a globalization, followed by a painful restructuring that pulled it away from the now no longer loved model of the conglomerate. On November 9, Lawrence Culp, its chief executive officer, announced that GE will split its remaining operations into three listed companies. “
The New York Times commented on the news of GE’s break-up, writing that the holding is finally breaking with its past, splitting into three businesses, and recalling how the group has been “victim of the persistent effects of the 2008 financial crisis and a rapidly growing economy less hospitable to global conglomerates ”.
CEO Culp defined the spin off as a choice in line with the times. On the other hand, the New York Times recalled how, in recent years, the great rival of GE, the tedesca Siemens, has proceeded with the spin-off of its energy and health care divisions, and like Honeywell International itself, has demobilized some operations in order to become leaner.
He also bet on the spin off Industrial Driver’s License which, yesterday, presented the timing of the spin-off of its Iveco division, which will make its official debut in Piazza Affari next January 3, after the approval of the prospectus for admission to the Stock Exchange arrived by the authorities. As a result of the demerger and the admission, CNH shareholders at the Record Date of the demerger will become shareholders of two independent and listed companies: CNH Industrial e Iveco Group.
Today, November 12th, two big announcements arrived from as many global giants, one from corporate Japan and the other from corporate America.
The first is the Japanese Toshiba, which today presented a plan to split into three independent companies, spinning off its core businesses: energy and infrastructure and products, and the other for devices and storage. After the spin off, Toshiba will continue to hold a 40.6% stake in memory chip maker Kioxia, as well as other assets. The plan is partly aimed at encouraging activist investors to exit the shareholder base, according to some sources.
In making the announcement, Toshiba commented that the decision was made for strengthen shareholder value.
“The decision will allow each business to significantly increase its focus and facilitate a process of more agile decision making and leaner cost structures “, reads the press release.
The second giant to surprise the markets was Johnson & Johnson, announcing a plan to split into two separate, Wall Street-listed companies: one will focus on consumer products offered by the multinational, while the other will be active in the retail market. prescription drugs and medical equipment. The stock of the American giant, also known for producing anti-Covid vaccines, jumped in the wake of the news by more than 4%.
The group is already undergoing a major transition process, as CEO Alex Gorsky announced that he will step down in July. It will therefore be Joaquin Duato, chosen to take over from Gorsky, to manage the new J&J post spinoff. The company has announced plans to keep its total dividend “at least at the same level” as it is now, following the split into two groups.