GE Infrastructure eyes acquisitions

By Jui Chakravorty Das

CHICAGO (Reuters) - General Electric Co's (GE.N: Quote, Profile, Research, Stock Buzz) infrastructure unit will likely make several acquisitions in the power storage, power management and control systems sectors in 2008, the unit's chief executive said on Monday.

"We have a pipeline of 20 to 30 companies that we are looking at all the time," John Rice, a GE vice chairman who is chief executive of GE's largest unit, told the Reuters Manufacturing Summit in Chicago in a telephone interview.

"So we call through this list ... and engage in discussions on a regular basis. It is possible there will be several ... important $300 million to $500 million bolt-on acquisitions this year," Rice said. "Particularly the ones that are preparing to put themselves up for auction."

GE Infrastructure, whose products range from jet engines to electricity-producing gas turbines, last year generated $57.9 billion in revenue and has forecast 15 percent growth this year.

"That growth rate is just organic," Rice said. "Any acquisitions would be over and above that."

With the credit crunch drying up the flow of private equity money, Rice said this was a "good time" for the company to be making deals.

Interest from private equity firms had pushed takeover prices sky-high -- but the credit squeeze has made it harder for the firms to borrow for takeover bids, forcing down asset prices.

"Certainly some of the crazy prices should be less crazy," Rice said. "There is going to be a value on synergy so strategic buyers like ourselves can truly take advantage."

"For us, we have to have a willing seller," Rice said. "We don't do hostile takeovers, we have to get it at a right price, it has to fit strategically."

Rice said the unit was looking for companies that had "complementary technology" in power storage and power management and opportunities to create more efficiency through control systems that apply to major equipment installations.

Rice said the company had enough "internal working capital" set aside to fund these acquisitions but would not disclose an amount.

"It's difficult to say which of the list will come to fruition," Rice said, adding that the unit was looking at as many target companies for acquisition outside the United States as within.

GE, the second-largest U.S. company by market capitalization behind Exxon Mobil Co (XOM.N: Quote, Profile, Research, Stock Buzz), expects about two-thirds of its 2008 revenue growth at its infrastructure unit to come from outside the United States, Rice said.

That growth will offset the effects of a slowing economy on GE Infrastructure.

Rice said GE expects strong growth opportunities in several countries including Vietnam, Angola, South Africa, India and markets in Latin America and Europe.  Continued...