After months of discussions, GE mining has finalised its $700 million purchase of Australian mine equipment manufacturer Industrea.
The new acquisition which will be called GE Industrea includes equipment manufacturing and servicing operations in Australia and China and will allow GE Mining to expand its current product and service offering.
GE transportation president and CEO, Lorenzo Simonelli said the company aims to grow its global mining business to around $5 billion over the next few years.
This acquisition marks the largest addition to the GE industrial portfolio in Australia and will play a key role in the company’s strategy to grow manufacturing, services and skills, Australia and New Zealand GE CEO Steve Sargent said.
“Through our acquisition of Industrea, we are making a strategic investment in establishing our first manufacturing footprint in Australia and increasing our high-end engineering base in this region by 50 percent,” Sargent said.
Both Sargent and GE Mining CEO Jeff Knox were yesterday at the Industrea site in New South Wales’ Hunter Valley to announce the deal.
“We looked long and hard to find this business, it fit a really nice niche for us, so we aren’t out to but volume, we’re out to buy smart transactions and reach, and that’s what Industrea is about,” he said.
“We really are generally excited that we’ve got this transaction done, we’ve been working so closely together in the last three to four months to get it done, to now say right we are together lets go get this happening,” Knox said.
Already Industrea has introduced American based GE Fairchild into the Chinese market through its well established networks there.
“We can now do this more officially and really create that leverage, the guys here have a great Chinese footprint some really good relationships, so we can leverage that now we have the deal done,” Knox said
Industrea is an example of an advanced manufacturing operation on Australian shores, they provide safe, productivity enhancing mining equipment like chock carriers, graders and dozers, which are exported to China and also used here on Australian mine sites.
Knox said Industrea’s skilled staff, good customer relationships and quality products were what drew GE mining to the company, adding that it was a platform they could add value to by reaching into other markets in the GE network.
Knox told Australian Mining that this deal demonstrates confidence in the underlying demand for resources, which would remain sound over the coming decades as urbanisation and growth in energy demand in emerging economies continues.
“Locally, Australia is in the right place at the right time to benefit from the Asian Century and productivity is critical to how we realise this opportunity.
“Productivity is the number one issue facing mining at present. This acquisition further strengthens our capability to solve the toughest challenges of our mining customers, helping to increase their productivity and efficiency across areas as diverse as water treatment, energy generation, transportation and finance,” said Knox.
GE Mining announced in May this year that they would acquire the Australian mining equipment and technology company, at the time Industrea told Australian Mining that GE had made an offer of $1.27 per share for 100 per cent of the company's issued shares, a 48% premium which valued the Australian firm at around $470 million.
David Beddall, chairman of Industrea, said at the time that "this is an attractive offer which is at a significant premium to the current share price".
Managing director of the company, Robin Levison, added that "GE's capital, technical expertise, and global customer relationships are expected to accelerate the growth of Industrea's businesses, building on the company's strong reputation for production and services that enhance the safety and productivity of mining companies".
In December last year, Industrea generated revenues of more than $100 million.