GE (NYSE: GE) announced today that it is pursuing acquisitions
of two underground mining equipment manufacturers in support of the
global expansion of its mining business. GE has entered into an
agreement to acquire 100 percent of Australia-based Industrea
Limited (ASX: IDL, OTCQX: IULTY), a provider of safety and
productivity-enhancing mining equipment and services. The
transaction is valued at approximately A$700 million, which
represents a 5.5x EBITDA multiple based on full-year financial data
as of Dec. 31, 2011. The company also signed a binding Letter of
Intent (LOI) to acquire Fairchild International, an independently
owned and operated underground mining equipment manufacturer
located in Glen Lyn, Virginia. Terms of the agreement were not
disclosed.
The combination of the two entities expands GE’s product
offering to address approximately 35% of the underground mining
value chain. Industrea Ltd. and Fairchild International together
are well positioned in dynamic growth regions for mining, including
Australia, China (Industrea), and the United States (Fairchild). GE
will enable these regionally focused enterprises to reach a global
customer base with enhanced products based on GE’s clean propulsion
systems, energy storage offering, and world-class system
integration capabilities. Both Industrea Ltd. and Fairchild
International will benefit from GE’s lean manufacturing and
effective global supply chain management.
Both companies will become part of GE Transportation’s global
mining business which utilizes the people, technologies, and
products from across GE to help its customers solve their toughest
mining challenges. GE helps mines work better by providing
innovative solutions in critical areas such as power, water, and
productivity.
Industrea Ltd.
With more than 700 employees, seven Australian locations, and a
significant presence in China, Industrea Ltd. is well positioned
for growth across its four divisions: Mining Equipment (flame- and
explosion-proof underground mining vehicles and equipment), Mining
Technology (drill guidance systems and collision avoidance
systems), Gas Management (specialized underground in-seam drilling
and gas drainage services) and Mining Services (integrated contract
mining services).
With the proposed acquisition of Industrea, GE makes a strategic
investment in expanding its manufacturing footprint to Australia
and contributing to a strong industrial manufacturing base in the
country. In addition, GE expands its product portfolio to
underground mining and increases its presence in key mining regions
Australia and China. Industrea Ltd. can benefit from GE’s global
footprint and customer relationships, and mining technologies.
Lorenzo Simonelli, President and CEO of GE Transportation said:
“Industrea has built an attractive business supplying major mining
companies in growth regions. The company has developed a solid
record of helping customers increase production while continually
implementing safety improvements.
“We believe that Industrea’s business can grow more rapidly by
expanding its product suite and geographic reach combined with GE’s
technical expertise and global customer relationships. GE’s
equipment experience, battery
and hybridization technologies, propulsion system
offering and global distribution capability will help us expand the
Industrea business. It will also improve the environmental
performance of Industrea’s products by lowering fuel use and
emissions. We see this as a way to bring the reality of
Ecomagination to the world of mining," Simonelli said.
Globally, mining equipment is a $61 billion industry driven by
dynamic, global infrastructure growth as well as several structural
factors such as increasing automation, and heightened safety and
environmental requirements.
Robin Levison, Managing Director and CEO of Industrea Ltd. said:
“GE’s resources, technical expertise and global customer
relationships are expected to accelerate the growth of Industrea’s
businesses, building on the company’s strong reputation for
products and services that enhance the safety and productivity of
mining companies. New career opportunities will open up for our
people, and customers will be able to benefit from increased
resources devoted to product development and innovation."
The transaction will be subject to shareholder approval.
Industrea Ltd. shareholders will vote on the offer in the second
half of 2012. The transaction is also subject to customary
conditions including relevant regulatory approvals. The transaction
is expected to close later in 2012.
Fairchild International
GE Transportation signed a binding Letter of Intent (LOI) to
acquire Virginia-based, independently owned and operated Fairchild
International. The company employs approximately 150 people and
manufactures a wide range of underground mining equipment,
including diesel and battery-powered scoops, continuous miners,
haulage systems, shield haulers, and maintenance vehicles.
With this acquisition, GE will expand its product offering to
underground mining and grow Fairchild’s customer base beyond its
core U.S. market to serve mining customers worldwide. With its
electric propulsion and state-of-the-art energy storage systems, GE
will be able to deliver higher efficiency and productivity to
mining customers worldwide while lowering fuel use, emissions, and
life-cycle cost.
Lorenzo Simonelli, President and CEO of GE Transportation said:
“With the acquisition of Fairchild International we will combine
nearly fifty years of leading industry knowledge and expertise in
designing, building and servicing underground mining equipment with
GE’s global reach, technology leadership in clean propulsion and
energy storage systems, and world-class system integration
capabilities. We will bring the next generation of top performing
underground mining equipment to mining customers around the
globe.”
Myrleen Fairchild, President of Fairchild International said:
“This is an exciting time for Fairchild International, our
employees, my family, and for me. I want to thank all our customers
and suppliers for their trust and support over the past decades.
I’m confident that our people and products will continue to
flourish under the leadership of GE for the benefit of our
customers.”
The transaction is expected to close in the third quarter of
2012. Terms of the agreement were not disclosed.
About GE
GE (NYSE: GE) works on things that matter. The best people and
the best technologies taking on the toughest challenges. Finding
solutions in energy, health and home, transportation and finance.
Building, powering, moving and curing the world. Not just
imagining. Doing. GE works. For more information, visit the
company's website at www.ge.com.
About GE Transportation
GE Transportation, a unit of GE (NYSE: GE), solves the world’s
toughest transportation challenges. GE Transportation builds
equipment that moves the rail, mining and marine industries. Our
fuel-efficient and lower-emissions freight and passenger
locomotives, diesel engines for rail, marine and stationary power
applications, signaling and software solutions, drive systems for
mining trucks, and value-added services help customers grow. GE
Transportation is headquartered in Erie, Penn., and employs
approximately 12,000 employees worldwide. For more information
visit the company's website at www.getransportation.com.
About Industrea Limited
Industrea provides highly specialised products and services to
the mining industry. Customers throughout the world use Industrea’s
products and services to enhance the safety and productivity of
their mining operations. Headquartered in Brisbane, Industrea is
listed on the Australian Securities Exchange under the ASX stock
code of IDL and on the OTCQX in the US under ticker code IULTY. For
more information on Industrea Limited and all announcements,
presentations and webcasts, please visit www.industrea.com.au.
About Fairchild International
Fairchild International has been serving the mining industry for
over 47 years and is an independently owned and operated
underground coal mining equipment manufacturer. The company
manufactures the industry's most complete line of AC VFD and DC
battery-powered scoops along with permissible and non-permissible
diesel-powered scoop and longwall shield haulers. Fairchild also
manufactures a range of low seam continuous miners and haulage
systems, maintenance vehicles, maintenance centers and cargo
carriers. The company is headquartered in Glen Lyn, VA, with
established warehouses and service centers in Beckley, WV; DuQuoin,
IL; Huntington, UT; Indiana, PA; and Pikeville, KY. For more
information visit the company's website at
www.fairchildint.com.
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