General Electric announced plans Thursday spin off its GE Digital business and establish an independent Internet of Things company, built around several GE Digital technologies.
GE is simultaneously selling a majority stake in Service Max to private equity shop Silver Lake, the company announced. Service Max is a software business GE Digital acquired for $915 million in November 2016.
"As an independently operated company, our digital business will be best positioned to advance our strategy to focus on our core verticals to deliver greater value for our customers and generate new value for shareholders," GE chairman and CEO Larry Culp said in a statement.
The spin off comes as GE also announced that GE Digital CEO Bill Ruh left the company. GE said it will "conduct an internal and external search to identify the CEO for this new independent company."
GE says more detail about the new internet of things company will be announced in the first quarter of next year. GE says the company will have its a new brand, as well its own equity structure and independent board of directors.
GE shares jumped 10 percent in premarket trading to $7.41 from Wednesday's close of $6.71 a share. The jump came after longtime bearish analyst Stephen Tusa of J.P. Morgan upgraded GE shares to neutral from underweight, saying the embattled industrial giant now has a more "balanced risk reward at current levels."
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