GE goes wild
For General Electric, 2006 may have been a bit slow in terms of acquisitions, compared with the frantic pace of earlier years. But 2007 is already shaping up as a banner year with two multibillion dollar moves even before the month of January is over.
GE bought the aerospace business of UK-based Smiths Industries for $4.8 billion. The company makes aerospace instrumentation and landing gear, selling to both Boeing and Airbus. It's a good fit with GE's leading position in aircraft engines - it's selling more to the same clients. Aerospace is the biggest part of Smiths, but there are also specialty engineering, medical equipment and security equipment divisions.
GE also, for $1.9 billion, agreed to buy the leading oil and gas drilling equipment maker equipment Vetco Gray. The US Company, specializing in offshore drilling, was turned over by three equity groups that bought it in 2004. GE Oil & Gas is already a significant player in the oil and gas exploration equipment sector, with over $3.5 billion in revenue, to which Vetco Gray will add another $1.5 billion. Rumors are rampant about what petroleum equipment company GE will pick up next.
GE has now agreed to buy the medical diagnostic unit of US-based Abbot Laboratories. The deal is for $8.1 billion. The Abbott division makes instruments for diagnosing such diseases as diabetes, cancer, and HIV. That division has revenues approaching $3 billion a year. Abbott will retain a few diagnostic products, but will concentrate on its pharmaceuticals business.
The move signals a new stage in GE's growth in diagnostics. The company took over UK-based Amersham PLC for $9.5 billion in 2003. GE is already strong in X-ray, ultrasound and other equipment.
GE has also puts its plastics business on sale, thinking it will generate about $10 billion.
The pattern seems to be a move away from materials research and into equipment, a set of busiensses with some fundamental similarities.. That is, in the half of the company not devoted to lending money and other financial products. GE is a skilled player of the gin game. continually refining its hand.
