GE to sell homeland security business to SAFRAN

GE Security has agreed to sell its Homeland Protection business to SAFRAN, a French firm which also operates security technology firm Sagem Securite, for $580 million. The purchase would give SAFRAN 81 percent ownership of the GE Security Homeland Protection division; GE would retain 19 percent ownership.

According to a statement issued by both companies, the Homeland Protection business will become part of Sagem Securite and will be led by Jean-Paul Jainsky, the current CEO of Sagem Security. GE's Dennis Cooke will stay on as president and CEO, and the division will remain headquartered in Newark, Calif.

“Following our 2008 acquisitions of SDU-Identification (a Dutch manufacturer of secure passports and ID documents) and Motorola’s biometrics business (Printrak brand), adding GE Homeland Protection will significantly bolster our group’s third core business," said SAFRAN CEO Jean-Paul Herteman, in a statement issued with notice of the acquisition. "This makes SAFRAN a pivotal player in the security market, a business that will generate 20 percent of the group’s total revenues in the medium term, with double-digit profit perspectives and reducing exposure to aerospace cycles. Furthermore, this transaction is the latest step in our long-standing relationship of mutual trust and partnership with GE that reaches back some 35 years."

"This move aligns Homeland Protection with a business that is committed to globalization and further investment in new detection technologies and new products for the Homeland Security space," said GE Security Homeland Protection President and CEO Dennis Cooke.

According to a statement from GE, even once the group is owned by SAFRAN/Sagem Securite, the division will still have research and development benefits by still having access to the GE Global Research Center and GE Healthcare.

The Homeland Protection business unit of GE has developed a variety of solution that might be used in airport security, including sensor technology for spotting traces of explosives and dangerous chemicals or biological agents.

According to Cooke, they've reached milestones in many of their technologies, having earned certification by the TSA for their CTX 9800 inline explosives baggage threat detection system. The unit handles 700 bags per hour and Cooke hopes to reach 1,000 bags per hour. "The clarity fo the image for the CTX9800 is just outstanding," said Cooke. "We see a bright future for it."

The company also received certification for its desktop trace detection product known as the Itemizer DX, and is in the certification readiness test process for a system that combines X-ray defraction with the company's existing CTX 94000 inline baggage screening system such that an X-ray defraction scan can be used to confirm or invalidate a threat detected by the algorithms of the CTX 9400. Cooke said the company is also continuing to research shoe scanning technologies and has had some success with its StreetLab handheld chemical threat detector which is primarily marketed to first responders. The company has plans to add Anthrax and E. Coli testing to the StreetLab mobile units, making it one of the first devices to combine chemical and biological threat detection.

According to Cooke, there are two reasons why GE's Homeland Protection unit will fit well within SAFRAN's Sagem Securite unit.

"First, from a technology point of view, they are industry leaders in biometrics and identity management. If you integrate all of these [GE Homeland Protection] products with biometrics, you create a really exciting solution for checkpoints -- and not just aviation checkpoints. Second, is that the geographic areas are of a complementary nature."

According to Cooke, as much as 70 percent of Sagem's business has been focused on Europe, the Middle East, Africa and Asia, while the same percentage of GE's Homeland Protection unit has been focused on the Americas. By combining the two firms, he says, they can each find traction in the others' main markets.

The transaction is expected to close in mid-2009, and is subject to financial regulations from both the U.S. and the European Union.