US giant General Electric (GE) aims to increase its presence in the booming resources sector through a $700 million friendly takeover for Australian mining equipment-maker Industrea.
Industrea shares jumped sharply after news of the takeover launch broke and were up 37 cents, or more than 43 per cent, at $1.23 at 1450 AEST.
“It is our first foray into mining equipment purely for miners and what these two companies do is start to build out our product portfolio,” GE Australian and New Zealand president Steve Sargent said.
“GE plays well in industries where we can leverage our global distribution and our global supply chain capabilities.”
GE, an industrial conglomerate with interests that span the globe, also on Tuesday said it would buy US equipment supplier Fairchild International.
Both deals would widen GE’s product offering to about 35 per cent of the underground mining value chain, it said.
GE will now provide equipment to mining majors BHP Billiton, Rio Tinto, Fortescue Metals and others.
Industrea is headquartered in Brisbane and has a strong presence in China, employs 700 people and has four divisions.
They are mining equipment, mining technology, gas management and mining services.
Mr Sargent said the move on Industrea was strategic, allowing it to tap into the $US61 billion ($A61.56 billion) global mining equipment industry and exposing it to the upside for further growth in mining in Asia.
GE forecasts growth of eight per cent a year in the global mining equipment industry up to 2020.
GE already provides power generation for resources companies.
This includes involvement in every one of $200 billion of liquefied natural gas (LNG) projects being built, or proposed to be built, around Australia.
It also provides water treatment, trains, signalling on lines, sub-stations and electric propulsion systems on mining trucks.
Mr Sargent said that despite recent negative press about growth in China slowing, the desire of developing countries to urbanise was an “unstoppable trend” and Australia’s energy, LNG, iron ore, coal and copper would stay in demand.
GE’s Australian-New Zealand operations provided services in oil and gas, energy, financial services, locomotives, healthcare and aviation.
They are expected to post revenue was $2.9 billion in 2011, a 67 per cent hike on 2010.
Double-digit growth is forecast this year.
The purchase of Industrea is subject to shareholder approval.
