GE's 2004 acquisitions
General Electric keeps expanding its core market segments through aggressive acquisitions. We traced a year's worth of moves for 2003, so now we'll look at the 2004 moves, division by division. The acquisitions seem to be working, as GE returns are up into the double-digit range for the first time in several years. Industry analysts are positive about the prospects of the company to keep growing.
While 2004 was seemingly less active in acquisitions than 2003, it still had a steady drumbeat of deals. One reason for the slowdown was in the NBC division, where the integration of the Universal Studios acquisition announced in 2003 was still in progress. That meant that there were no other media deals during the year.
The most significant deacquisition of the year was the sales of a share of some of GE's insurance assets. GE spun off its life and mortgage insurance assets into a new company called Genworth. GE still controls 70% of the stock in the nearly $10 billion operation.
According to Business Week story ("The GE Spin-Off You Never Heard OF", 5/31/2004) this spin off was due to no weakness in the insurance operations. On the contrary, the new company looks to be profitable. There are other reasons for the [partial] deacquisition the article notes:
For one, {GE CEO} Immelt wants to improve the transparency of GE's own debt structure. More important, he aims to cut back on the capital GE has invested in slower-growth segments and put the money to work in more sprightly businesses instead. While Genworth is a hot property as far as insurers go -- with $935 million in net profits for 2003, it's a leading player in several key sectors -- that performance simply isn't good enough for GE.
Like a good gin rummy player, GE is trading upwards from good cards to even better ones.
The big acquisition this year was British medical equipment company Amershanm plc, which GE acquired for $9.5 billion. There were a number of other $1 billion plus deals.
A Reuters story ("GE's Transformation Seen Paying Off in 05", 1/1/2005) also notes the company's strong move into what its sees as growing areas.
[CEO} Immelt also pushed the company deeper into consumer finance and infrastructure, which includes security systems and water purification. GE forecasts that these two businesses will grow three times faster than the U.S. gross domestic product.
GE Infrastructure
- InVision Technologies, the leading provider of explosives detections systems in the US. ($900 million)
Ionics, a major Water purification and wastewater treatment company. ($1.1 billion)
- Edwards Systems Technology, the fire detection division of US-based SPX Corporation ($1.3 billion)
GE Consumer Finance
- DeltaBank, a Russian consumer bank, a major credit acrd issuer (€123 million)
- Wizard Home Loans (Australia) for $510 million Australian).
- The credit card operations of retailer Dillard's ($1.25 billion)
WMC Finance, a major US wholesale lender (undisclosed)
GE Commercial Finance
- Bay4 Capital, a lessor of IT equipment to corporations. (undisclosed)
- In partnership with Southern Union Company (a seller of natural gas) acquire CrossCountry Energy from bankrupt Enron. CrossCountry owns several major gas pipelines. ($2.4 billion total)
- CitiCapital's Transportation Financial Services Group, a division of US-based Citigroup The company does asset lending to the commercial trucking industry ($4.4 billion)
- The office equipment leasing business of IKON Office Systems in Ethernet US and Canada ($1.5 billion)
- The commercial finance division of Boeing Aircraft ($2 billion)
- The commercial finance business of Transamerica Corporation, a division of AEG ($5.4 billion)
GE Energy
- BHA Group Holdings which sells emission reduction equipment for power plants ($260 million)
- In a four-part deal with privately-held S.D. Myers (price not
disclosed)
-- Fluidex Engineering of South Africa, a specialist in transformer oil processing equipment.
--Ohio Transformer, a leader in repair services for electrical transformers.
--S.D. Myers Substation Services a provider of services for energy substation management.
--S.D. Myers Engineered Transformer Products makes products for electric transformer maintenance.
- The coal gasification business of ChevronTexaco (price unavailable)
- AstroPower, a US maker of solar energy collection products. ($18 million)
GE Healthcare
- The assets of Amersham plc, a British developer of medical technology ($0.5 billion)
- HPSC, a major provider of financing to medical and dental practices. ($72 Million)
