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GE Security sells off Homeland Protection unit to focus on 'core'

GE Security sells off Homeland Protection unit to focus on 'core' $580 million deal strengthens Safran's offering as well

NEWARK, Calif.--GE Security has agreed to sell the majority of its Homeland Protection business to Safran, a French company known mainly in the security industry for its Sagem Securite business. Safran would pay $580 million for 81 percent ownership of the business. GE would retain a 19 percent stake.

This is the same piece of GE Security's business that Smiths Detection agreed to buy 65 percent of in 2007 before the deal fell through.

Since that time, said GE Security CEO and president Dean Seavers, who was not with GE when the Smiths deal was struck, "we've had a number of folks express interest in the business, but we were looking at the Homeland business and saying, 'What's the best platform for it to grow?'" GE Security has had a 35-year relationship with Safran, working together in the aviation industry, and Seavers called that a "successful history."

Seavers pointed to the retained 19 percent stake in the company as evidence that GE expects the Homeland Protection business to grow and that GE wants to participate in that growth. However, "the business tends to be more event driven," Seavers said, "like the recent events in India. That helps drive the demand for the business ... and when they buy it tends to be lumpy; they buy in bigger chunks. The long-term prospects are attractive, but the lumpiness is unattractive."

Less lumpy is what Seavers described as GE Security's "core business": intrusion, access, video and transmission, key control, and fire and communications. All of those products go through the traditional security channel, while the Homeland Protection business tended to be direct to the end user, and without that business "it allows us to be that much more focused on our channel partners, and to drive the solutions that make our channel partners more successful. It's easy to focus on what we're getting rid of, but there's also what it allows us to do with the portfolio we are keeping."

He mentioned the ES3 line in fire, and the TruVision line in video, as examples of where GE Security can still grow, entering "segments of the market where we just haven't competed, like the distribution channel. We're just increasing the number of channels that we sell through."

When asked about whether GE Security is selling to a competitor, and possibly bolstering Safran's standing in the marketplace, Seavers said he explored that possibility and found it unlikely they'd be selling against one another. "I went right to our access control experts and did an analysis," he said, "and we're comfortable that there's isn't much overlap. We see it in the short term being complementary--they deal with a lot of controlling people in sensitive zones and logical access, and we'll be able to explore other avenues for us to go at the aviation vertical with a combined effort."

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