GE Security looking for buyers
By Jennifer Brown
General Electric Co. has reportedly put the company’s security division up for sale and speculation is the fire portion of the business could draw the most interest from potential buyers.
By Jennifer Brown
Bloomberg News reported Aug. 26 that GE Security had hired JP Morgan Chase to find a buyer. When asked to comment, Michelle May, communications manager with GE Enterprise Solutions said the company "is not commenting on rumours."
The news that GE Security could be up for sale did not come as a surprise to analysts who follow the industry, saying in the last few years GE Security suffered from a lack of communication with customers and understanding of the importance of relationships.
“I’m not surprised, if you look at the brand today they haven’t kept up and they made mistakes in getting rid of a lot of good field people who knew the industry and had the relationships,” says Sandra Jones of Sandra Jones and Company, a security industry-consulting firm based in Chardon, Ohio.
Jones says the current GE Security is not the company that was originally built up by former president and CEO Ken Boyda who led the acquisitions.
“GE just didn’t communicate well. They ran into problems with things like the credit piece, which was handled by a call centre in India and returns were a nightmare,” she says.
Understanding the security market and the importance of building relationships within the industry became a problem for GE in an industry she says requires “a different dedication.”
“It’s really a passion. Some of the best and brightest people work for GE, but they just didn’t know the market and they handled it in such a way it helped to undermine what good technology they had. It’s not always about the brand, it’s about what you wrap around the brand — where the relationships are.”
GE built the security division through acquisitions starting in 2002. It was projected the security division would have $3 billion in sales by 2011, up from about $1.8 billion in 2007, but today it is estimated the business might fetch $2 billion.
One of the main businesses acquired to build the security division was Edwards Systems Technology, a company started in 1929 with offices in Montreal and Owen Sound, Ont. It was purchased for $1.395 billion from SPX Corp. in 2005.
For those kicking the tires, Jones says there are several components that will be of particular interest, including the fire business.
“Someone will get a good deal. The fire brand is still good and a great nugget within GE. The fire business is probably the jewel in the crown — I think you will see many bidders for that piece; it’s excellent, and the smoke detector business is also good,” she says.
She also noted that the Simon security panels sold by GE and the GE cameras are also good product lines, but there may be some housecleaning of other brands.
Industry speculation is that potential buyers might be Tyco or Schneider Electric, which purchased Pelco in August 2007.
In April GE agreed to sell an 81 per cent stake in a part of its security division, the Homeland Protection unit that sells technology for airports, to Paris-based Safran SA for $580 million.