GE eyes biometrics for security business growth

By Daisuke Wakabayashi

NEW YORK (Reuters) - General Electric Co. (GE.N: Quote, Profile, Research, Stock Buzz) aims to expand its fast-growing security business into the field of biometrics -- identity verification using advanced biological technology -- through acquisitions and investment, the industrial conglomerate's vice chairman said on Wednesday.

Security is one of GE's fastest-growing businesses, offering products such as puffer machines to detect plastic explosives and handheld bomb detection devices, and the company has made several acquisitions in recent years within the segment.

Industry executives expect the market for biometric products like fingerprint and face-recognition technology to grow at an annual rate of 40 percent over the next few years. GE has a small presence in biometrics, but understands the potential for security applications.

"To really understand who's coming in and who's going out and really get it right, biometrics are a big part of that," said GE Vice Chairman John Rice speaking at the Reuters Manufacturing and Transportation Summit in New York.

"We have a number of smaller activities, and we're looking more broadly at what we can do to invest whether we can do it ourselves to expand or potentially some acquisitions," said Rice, who oversees GE's $33 billion industrial unit.

The company has increased investment in the security segment at an annual average growth rate of over 40 percent since 2002, according to GE, which has businesses ranging from financing to television networks to energy equipment.

"This market keeps expanding and getting redefined," said Rice, a 28-year GE veteran. "Part of the opportunity is to define the market."

Fairfield, Connecticut,-based General Electric bought bomb-detection equipment maker InVision Technologies Inc. in 2004 for $900 million and also acquired a fire detection system company from SPX Corp. (SPW.N: Quote, Profile, Research, Stock Buzz) for $1.4 billion.

Security is one of the hot pockets for acquisition activity, and GE was forced to pay a premium for InVision, an indication that deals within the sector are not cheap, said Rice, who was promoted to vice chairman last year.

"Prices are up. There is a lot of capital available. There is no question the buying process that results in good value is a little tougher," he said. "In today's environment, you have to be prepared to walk away (from a deal)."

GE's advantage over private equity buyers is the ability to drive out costs and accrue savings once it integrates any new acquisition with existing businesses, said Rice.