By Drew FitzGerald and Kate Linebaugh
Of THE WALL STREET JOURNAL
General Electric Co. (GE) agreed to buy Australia-based
mining-equipment maker Industrea Ltd. (IDL.AU) for about A$700
million ($696.6 million), adding to its footprint in a fast-growing
sector.
The industrial conglomerate also agreed to acquire privately
held equipment maker Fairchild International, a U.S. mining
supplier, for an undisclosed amount.
GE touted both acquisitions as a way to take advantage of
growing mining in Australia, China and the U.S. The deals expand
GE's breadth of product offerings to address about 35% of the
underground mining value chain, the company said.
GE expects its business in Australia this year to be bigger than
China as part of its strategy to piggyback on booming growth in
resource-rich countries. The approach is based on a bet that the
price of energy and minerals will remain strong and there will be a
market for GE's industrial products like compressors, locomotives
and power generators.
"This is a sector that we are interested in. We think it has
good prospects," Lorenzo Simonelli, who heads GE's transportation
unit, said in an interview. Simonelli has been tasked with
expanding GE's locomotive and transportation business globally and
expanding into new applications such as mining.
GE is creating a new mining business that draws on various
products across its portfolio such as power generation equipment
and water processing. That is now under Simonelli's purview, he
said.
GE's transportation business has been thriving amid a rise in
locomotive sales. In the first quarter, profit in the business rose
48%, the highest of all of GE's divisions, to $232 million.
GE's shares were recently up 4 cents at $18.44 after hours. The
stock has declined by about 7.5% over the past year.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909;
Andrew.FitzGerald@dowjones.com
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