Jim Cramer of CNBC applauded GE’s decision to split itself into three separate firms

Jim Cramer of CNBC complimented General Electric’s proposal to split itself into three separate firms focusing on energy, aviation, and health care on Tuesday.

While the ultimate separation of the American industrial conglomerate may be symbolic, the “Mad Money” host believes it is the right and essential financial decision, and he has faith in GE’s CEO, Larry Culp.

According to Cramer, Culp, who arrived at GE in 2018, “saved the company.” “While we may lament the loss of the GE name, the divisions themselves were like a house divided, which could not stand.”

Cramer praised Culp for restructuring GE’s business structure and cleaning up the company’s balance sheet, which had been harmed by the financial crisis. Cramer, on the other hand, believes that keeping the surviving units together no longer makes sense.

“To put it another way, if you were founding a firm today, you would never develop one that is part aircraft, part universal healthcare, and part energy, including renewables,” Cramer said.

According to a press release from GE, the corporation plans to spin off its health-care division in early 2023 and its energy division in early 2024. The existing GE will be the aviation-focused corporation.

Cramer believes that once this happens, Wall Street analysts and investors will find it simpler to support standalone enterprises.

“Even at its pinnacle, this combination hasn’t been able to excite anyone for twenty years, which is why you had to do this,” the former hedge fund manager said, adding that as separate businesses, it might be a different storey.

“A health-care firm built on insatiable demand for MRI machines? Cramer responded, “That’s an excellent one.” “For money managers who want to go green — and there are a lot of them out there — the power and renewables business might be quite appealing.”