GE to Sell Security Business, Precision Castparts Expands Its Forging Capabilities

Strategic Insights -

General Electric (NYSE: GE) is planning to sell its security business, which manufactures alarms, surveillance systems, and other safety products, with a potential sale price of $2 billion. The move is in line with GE's strategy to exit non-core businesses. The company has hired JPMorgan Chase & Co. (NYSE: JPM) to facilitate the sale, which has drawn interest from United Technologies Corp. (NYSE: UTX) and Tyco International (NYSE: TYC). However, due to the economic environment, bid amounts may be lower than expected.

Precision Castparts Corp. (NYSE: PCP) has strengthened its forging capabilities by acquiring Carlton Forge Works and related entities for $850 million. The acquisition, expected to be completed in the third quarter of fiscal 2010, will be immediately accretive to the company's earnings. Carlton Forge Works is a leading manufacturer of seamless rolled rings for critical aerospace applications, and the acquisition will support Precision Castparts' growth in the aerospace and power generation markets.

Key Takeaways:

  • GE plans to sell its security business, with a potential sale price of $2 billion, as part of its strategy to exit non-core businesses.
  • The sale has drawn interest from United Technologies Corp. (NYSE: UTX) and Tyco International (NYSE: TYC).
  • Precision Castparts Corp. (NYSE: PCP) has acquired Carlton Forge Works and related entities for $850 million to strengthen its forging capabilities.
  • The acquisition will be immediately accretive to Precision Castparts' earnings and support its growth in the aerospace and power generation markets.
  • Precision Castparts derived 43.6% of its fiscal 2009 revenue from the Forged Products segment.

Statistics:

  • GE's security business has a potential sale price of $2 billion.
  • Precision Castparts acquired Carlton Forge Works and related entities for $850 million.
  • Precision Castparts derived 43.6% of its fiscal 2009 revenue from the Forged Products segment.
  • The acquisition is expected to be completed in the third quarter of fiscal 2010.
  • The company's forging capabilities will be supported by the acquisition, which will be immediately accretive to the company's earnings.

Sources:

  • Zacks.com
  • General Electric (NYSE: GE)
  • JPMorgan Chase & Co. (NYSE: JPM)
  • United Technologies Corp. (NYSE: UTX)
  • Tyco International (NYSE: TYC)
  • Precision Castparts Corp. (NYSE: PCP)