General Electric to spin off its healthcare business

General Electric revealed plans to spin off its healthcare business and shed its stake in the oil-services company Baker Hughes.

In a statement General Electric said it will focus on its aviation, power and renewable energy businesses to make the company a simpler and stronger high-tech industrial company.

Over the next 12 months GE will spin off its separate GE Healthcare into a standalone company and pursue an orderly separation from Baker Hughes over the next two to three years. GE also plans on cutting its debt by approximately $25 billion by 2020 and have over $15 billion of cash on the balance sheet.

The board of the company approved the new strategy.

“Today marks an important milestone in GE’s history,” said John Flannery, chairman and CEO of GE.

“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.”

Flannery added:

“GE Healthcare and BHGE are excellent examples of GE at its best—anticipating customer needs, breaking barriers through innovation and delivering life-changing products and services. Today’s actions unlock both a pure-play healthcare company and a tier-one oil and gas servicing and equipment player.

“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.”

The decision comes after Siemens floated its medical business as a separate company in March.