Rajesh Singh and Anirban S

(Reuters) – A generation has been waiting for the breaking up. General Electric (NYSE:) Co insiders.

Larry Culp became the first GE chief executive to be elected from the inside.

This was far from the board meetings that Culp held back in 1980s and 1990s under Jack Welch, one of his predecessors. This legendary entrepreneur convinced the GE board that he was moving in the other direction. GE got into many businesses including mortgages, credit cards, television entertainment, prompting the Federal Reserve not to allow the company to fail.

Jeff Immelt, John Flannery and John Flannery were Welch’s successors. They gradually sold off many of GE’s businesses in order to increase the share price, which was ailing, over the 20-year period.

Culp was the one who managed to untangle GE. He had a plan for three separate companies that would house its power, healthcare and aviation businesses.

After six months as a director on the board, Culp, 58 became GE’s CEO. According to a source familiar with the matter Culp began discussing the possibility of a breakup with GE’s board a full year before he was appointed CEO. However, the discussions intensified over the past six months, as GE’s plan he had put together became a reality.

Culp spoke to Reuters about the “progress on deleveraging”, the operational transformation and pandemic lifting. Culp said, “It is the right thing.”

Although the idea of a spin-off healthcare company was already in place, Flannery first proposed it to the public back in 2018. However, it never came to fruition. Flannery was fired after financial problems at GE’s power division escalated into a major crisis.

People familiar with the matter stated that Culp was a former CEO at Danaher Corp, an industrial conglomerate. He conducted a review from top to bottom of GE’s many businesses and profit-and loss lines in the weeks following his appointment. Investors and analysts praised him for improving GE’s profitability.

Culp decided that the healthcare company, a major supplier of instrumentation and medical equipment, was too significant a cash source. Meanwhile, GE’s remaining two businesses could not be self-sufficient to allow the dissolution of their business.

ARE YOU READY TO BREAK-UP?

Culp was determined to keep the idea alive and cut GE with other deals. These deals included a merger of GE’s jet-leasing business with Ireland’s AerCap for $30 billion and the sale of Danaher’s biopharma company for $21 billion.

Now, GE is making a return on its troubled power business. It has seen its renewable energy business improve in cost and can now capitalise upon the transition to low carbon economies.

“We have the ability to spin healthcare. We are the first. This business clearly is performing well. Culp stated to Reuters that we have preparations for the (abandoned IPO) a few years back.

“We’ve discussed the remaining work in renewables, but we’ll be really ready to take this next step early in 2024.”

Trian Fund Management, a ally of Culp, praised the recent moves and stated it “enthusiastically supports the important step in GE transformation.”

Culp’s time with GE is not without critics.

GE shareholders rejected a Culp payout of up to $230 million earlier this year in a non binding vote.

Glass Lewis and Institutional Shareholder Services Inc were opposed to the pay packages.

GE countered by stating that Culp was being incentivised with the payment.