Making sense of major corporate splits at GE and J&J

EVANSTON, Ill. — Craig Garthwaite, Kellogg School of Management professor and an expert on healthcare mergers and acquisitions, is available to speak with media on recent corporate splits at General Electric and Johnson & Johnson.

Media interested in interviewing professor Garthwaite should contact Abby Daniel at abby.daniel@kellogg.northwestern.edu.

Quote from professor Garthwaite
“This week there has been a lot of news about massive firms splitting up (i.e. GE and J&J). It's important to step back and consider what we can and what we can't learn from these events. This is particularly relevant given the rising vertical integration in healthcare.

“GE and J&J owned a lot of different businesses at the same stage of the value chain. While there could be economies of scope arguments to support this structure, they were harder and harder to justify for these firms. I believe that is why you are seeing these firms follow the recent path of Pfizer and break up into more focused firms. This, however, is quite different from the M&A activity you see from UHG, CVS/Aetna, and Humana—which is about integrating up and down value chain.”