Inside GE's Planned Acquisition of Edwards Systems Technology

Consolidation is again the name of the game in the security industry with GE's recent announcement that the company is moving forward with plans to acquire Edwards Systems Technology, best known in the security industry for the company's enterprise-wide fire, access control and security systems as well as for its visual and audible signaling technologies.

The move, which will cost GE just under $1.4 billion, comes in a long list of acquisitions for GE, whose foray into the facility infrastructure and security markets has been a cornerstone of the company's growth plan. Chalk this one up on the list that includes Casi-Rusco, International Fiber Systems, Kilsen, Interlogix, Infographic Systems, InVision and other high-profile security and life protection/fire prevention companies.

"One of our stated strategies is to solidify our leadership position through organic growth and acquisitions," said GE Infrastructure, Security Director of Communications Jay Pinkert in an interview with Pinkert said he expects the company to continue to acquire market-specific companies that will help GE cover the facility and security market.

"It's very complementary to our business strategy as well as our technology framework. A fire protection framework was essential to our facility management platform."

The acquisition, which is expected to be finalized in the first quarter of 2005, will see the merging of the Edwards Systems Technology brand into the GE Infrastructure, Security umbrella. According to Pinkert, the Edwards will continue to exist "for a time."

"There is a standard time for transition, especially with products and companies that have a positive recognition like Edwards," said Pinkert, who cited the GE and Interlogix acquisition and subsequent brand transfer. He said that until the Edwards and GE deal is complete, that timeline would not be known.

"I think the acquisition has a big upside," said Pinkert of the pending deal. "For our dealer program members, they're getting access to a wide product line. And for our high-end integrators, it gives them a greater solutions set. And it's likewise for Edwards customers -- it cuts both ways."

The organizational plan for how Edwards will operate within the sphere of GE has not been clarified yet, and while news reports say that Edwards employees report business as usual at plants, the word "layoffs" has cropped up a few times in speculative reports. But it's still too early to make those kinds of assumptions, said Pinkert, who noted that Edwards Systems Technology was a profitable division of SPX Corporation.

"You can't even say as far as what will happen on an operational level," said Pinkert. "It may or may not include changes in manufacturing."

Edwards Systems Technology is not new to an ownership transfer. The company became part of Charlotte, N.C.-based SPX Corporation with SPX's acquisition of General Signal six years ago. The company then acquired other signaling and fire systems technology companies which it added to the Edwards group according to an SPX statement.

The sale of Edwards Systems Technology to General Electric now allows SPX to "pay down debt and buy back equity." The move comes just over two weeks since SPX announced the sale of BOMAG, a German company that manufactured equipment for soil, asphalt and trash compaction. That sale, at $446 million in cash, paled in comparison to the $1.4 billion sale of the Edwards division to GE.

GE's last major expansion into fire protection was with Spanish fire detection and controls systems company Kilsen, which it acquired in July 2002.