Diversified conglomerate General Electric Co. (GE) agreed Tuesday to acquire two regionally focused underground mining equipment manufacturers in order to boost the global expansion of its mining business.
GE agreed to buy Brisbane, Australia-based Industrea Ltd. (IDL.AX, IULTY.PK) in a deal valued at about A$700 million. GE Transportation also will buy Glen Lyn, Virginia-based privately-held Fairchild International for undisclosed terms.
GE said both companies will become part of GE Transportation's global mining business that helps its customers solve their toughest mining challenges. GE said the combination of the two entities will expand its product offering to address about 35 percent of the underground mining value chain.
The proposed acquisitions will provides GE with a foundation in specialized underground mining equipment and services, and expands GE Transportation's presence in fast-growing regions. The deal will also help GE to take a larger bite of the $61 billion global mining equipment industry.
The deals will also enable the two regionally focused companies, Industrea in Australia and China as well as Fairchild in the U.S., to gain access to GE's global customer base with enhanced products.
The Industrea deal will enable GE to increase its presence in dynamic growth regions for mining as Industrea operates in seven Australian locations and has a major presence in China.
"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," Lorenzo Simonelli, president and CEO of GE Transportation said in a statement.
The Industrea deal, subject to shareholder approval is expected to close later in 2012. Industrea shareholders will vote on the deal in the second half of 2012.
The Fairchild deal will help GE expand its product offering to underground mining in the U.S.. Meanwhile, Fairchild will be able to grow its customer base beyond its core U.S. market. The deal is expected to close in the third quarter of 2012.
"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," Simonelli added.
GE closed Tuesday's regular trading session at $18.40, down $0.20 or 1.08% on a volume of 47.57 million shares.
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