GE stands to gain fire line from EST

GE has bid $1.4 billion to buy Edwards Systems Technology, in one of its largest deals to date
Wednesday, December 1, 2004

SARASOTA, Fla. - A little more than a week after rumors began surfacing within the industry that General Electric may be interested in buying Edwards Systems Technology, that talk turned into reality.

In mid-November, GE Infrastructure said it plans to buy Edwards Systems Technology for $1.4 billion from SPX Corp. The deal is subject to regulatory approval, but could close in early 2005.

Perhaps the most significant piece of the transaction for GE is the fire products business it would gain. It will give GE Security access to an extensive line of fire products to sell in the North American market for the first time, such as industrial systems, signaling products and ancillary devices, such as smoke detectors.

“Fire is one of the cornerstones of the security systems,” said Jay Pinkert, spokesman for GE Infrastructure. “It’s a gap in the current spectrum of solutions that we provide.”

While GE owns the Kilsen line of fire products,   a Spanish company it bought two years ago, the products are not UL rated for this market. Pinkert said GE had been working on bringing that brand from Europe into North American, but if the Edwards Systems Technology deal comes through, it would become unnecessary.

SPX Corp., a multi-industrial manufacturer, has owned EST since 1997 but decided to sell the business due to deteriorating earnings and a depressed stock price. The sell off by SPX Corp. came as a surprise to one industry analyst, who expects the financial impact from the sale to be short-lived.

“It shows the depth of the problems that SPX is having,” said John Mack, president and chief executive officer of USBX Advisory Services. “They sold off one of their best businesses.”

The Edwards Systems Technology transaction not only includes the EST line of fire products, but also Mirtone, Edwards Signaling, an international fire product known as Xiton, access control manufacturer IDenticard and nurse call company Dukane, according to Steve Hein, director of marketing for Edwards Systems Technology.

It was just last year that Edwards Systems Technology bought IDenticard, preceded by its purchase of Dukane in 2002. At the time of the IDenticard purchase, officials at Edwards Systems Technology said the plan was to build a total solutions provider.

Together the Edwards Systems Technology companies represent $450 million in annual sales, said Hein, and employs 2,300 people. It operates a service arm in Canada, with manufacturing plants in Pittsfield, Maine, Owen Sound, Ontario and Cape Town, South Africa.

If GE completes the purchase of Edwards Systems Technology, it will place them in line with fire product competitors Honeywell, owners of Notifier, Gamewell, Silent Knight, FCI and other fire prands and Tyco, which owns SimplexGrinnell. It will also leave few independent fire product manufacturers still in the market.

“If GE wants to be a player in this space, they have to own it,” said Mack. “The price they plan to pay would suggest they were a very motivated buyer.”