CORRECT: GE To Buy Mining Supplier Industrea For About A$470 Million
May 16 2012 - 12:53AM
Dow Jones News
General Electric Co. (GE) has moved to bolster its footprint in
the fast-growing mining equipment sector, agreeing to buy
Australia's Industrea Ltd. (IDL.AU) for about A$470 million ($466
million) as well as an independently owned U.S. supplier for an
undisclosed amount.
Industrea's board in a separate statement Wednesday said it is
unanimously recommending the cash offer, although it has negotiated
to sell its mining services division separately in the hope of
attracting a higher price.
GE said the acquisitions will increase its exposure to the $61
billion global mining equipment industry, and it will be able to
expand the two regionally focused companies to reach a global
customer base. Both will benefit from the industrial conglomerate's
lean manufacturing and global supply chain management, it said.
The two companies will become part of GE Transportation's global
mining business.
Industrea, which operates from seven locations in resource-rich
Australia and has a significant presence in China, said the A$1.27
per share bid represented a 48% premium to the last closing price
for the company's shares. New of the offer buoyed the shares, which
at 0210 GMT were trading 44% higher at A$1.235.
Robin Levison, chief executive of the Australian company, told
reporters during a conference call that negotiations with GE had
taken place over the past few weeks before the U.S. company secured
the backing of Industrea's board, in the absence of a higher
offer.
Mr. Levison said GE's focus clearly is on mining equipment, and
Industrea's board believes there may be a suitor willing to pay
more for the services operations. He declined to say whether
Industrea has received any approaches, but added that if a higher
bid for the division is received then the bid amount will be
subtracted from the A$1.27 bid price GE will have to pay and if no
better offer is received then the unit will remain part of
Industrea and join GE.
The value of the services division is included in the A$1.27
offer, but isn't being disclosed, a spokesman for Industrea said.
GE's offer values Industrea at about A$700 million, including
debt.
Lorenzo Simonelli, president and CEO of GE Transportation said:
"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 relationship."
Industrea said it is expecting net profit this financial year of
between A$40 million and A$45 million, down from A$47.9 million the
year before.
GE has also signed a binding agreement to buy Virginia-based
Fairchild International, which it said manufactures a range of
underground mining equipment. GE said it will grow the independent
company's focus beyond the U.S.
-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094;
robb.stewart@dowjones.com
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