May 23, 2024 - Business

These iconic American companies are breaking up

Illustration of a shape of a briefcase compiled of numerous smaller briefcases

Illustration: Annelise Capossela/Axios

Some of America's most iconic companies are heading for splitsville, having decided their businesses will be worth more apart than they are together.

Why it matters: The movement calls into question the future of the conglomerate model, which was long hailed as a way for companies to maximize profits.

Driving the news: Chemical maker DuPont announced yesterday after the closing bell that it's breaking up into three publicly traded companies:

  • Electronics (a $4 billion revenue company), water ($1.5 billion) and industrial ($6.6 billion).

The big picture: It's just the latest in a series of companies following a similar path.

  • 2021, 2022 and 2023 ranked first, second and third, respectively, in most spinoffs from the last 10 years, Bloomberg reported.

Zoom in: 211 companies completed spinoffs in 2023. Among them:

  • Johnson & Johnson split off its consumer business into a new company, Kenvue, with products like Band-Aids, Tylenol and Listerine.
  • Kellogg split into snacking company Kellanova and North American cereal company WK Kellogg.

And General Electric split up into three companies this year: GE HealthCare, GE Aerospace and energy business GE Vernova.

What they're saying: "They are loose collections of parts that don't always make sense to keep together anymore," Barry Cross, a professor at the Queen's University Smith School of Business, told Bloomberg.

  • Splitting up "can provide more value with focused leadership teams and fewer distractions from brother and sister units."

What we're watching: Yesterday's industrial conglomerates may be disappearing, but Big Tech has been borrowing their old playbook, a trend the Economist noted back in 2019.

  • Critics say they have accumulated too much heft — in disparate industries — via their incredible size.
  • Amazon, Apple and Google all face FTC lawsuits accusing them of having monopoly power.

The bottom line: Bigger isn't always better.

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