GE Eyes German Tech Companies for Expansion
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Things have been looking up for General Electric (NYSE: GE) lately. The company is expanding into new areas such as healthcare, while also eyeing several German companies as potential acquisitions. GE is also investing $900 million in developing the country of Turkey through several different sectors. In this article, I will discuss how these new developments make GE a lucrative investment opportunity that investors should seriously consider now.
One of the points in support of the argument is that General Electric, as part of its expansion plans, is set to acquire some midsize companies in Germany. The focus is on non-listed technology leaders in the core areas of General Electric's business. News has it that General Electric has a budget of between $5 and $6 billion on mergers and acquisitions all over the world, and it is still very early to know the exact percentage that will go to German acquisitions. Yet, it is safe to assume that GE's focus on the type of businesses that it intends to buy (family-owned, midsize business) may be an indication of the level of investment it plans to make.
In fact, you should know that GE is set to conclude an acquisition deal by the end of this year. If all should go as planned by GE, it leaves hardly any room for doubt about the future profitability of GE. For one. The idea of buying only leading companies in its core business areas will ensure that the acquisitions are actually assets that can make GE a leader in the industry. Moreso, the fact that GE is interested in making acquisitions of family-owned businesses at a time like this, when the market is fairly-priced, will ensure that it gets top dollar for every dime spent on the acquisitions.
On another note, it was reported that the Indian arm of General Electric has said that it will build a facility for the manufacturing of products that can be used in the energy sector in an investment worth about $200 million. The manufacturing facility, which is set to be in the city of Pune in western Maharashtra, will begin operations by the year 2013. According to a statement by General Electric "The facility, to begin with, will focus on energy products and technologies driven by the industry needs for power generation, transmission and distribution as well as measurement and control." It may also interest you to know that the facility would also be responsible for the assembling of hybrid batteries and biogas power-generation technologies just to name a few of General Electric's eco-friendly products.
In another related development, news has it that General Electric has announced its plan to invest about $900 million in developing the aviation, health, energy, and infrastructure and transportation sectors in Turkey over the course of the next 3 years. This assertion was made in lieu of the fact that the Turkish government has shown interest in giving investors encouraging incentives.
General Electric's plan of going into the energy sector in Turkey among other markets, may position it to become a leading energy provider in the country at least in the foreseeable future. The reason for this is that the demand for energy is increasing by about 6% percent yearly, more than the 4% annual increase in demand that was forecasted by the government. Hence, without wasting much time, General Electric is well positioned to tap into a higher level of profitability with its acquisitions and investments in foreign markets.
However, if you look at General Electric's competitors in the industry, it may be easy to conclude that many of them are set to move into periods of profitability. For example, United Technologies (UTX) is in the news for a conditional approval that it got from China for the takeover of Goodrich (GR) who makes aircraft parts. It seems that some of the conditions required for the final approval of the deal dictate that UTX sell some undisclosed assets. The $16.5 billion takeover deal is still subject to the approval of the EU regulatory approval commission.
In another competitor's news, 3M (NYSE: MMM) remains optimistic that there is a high probability that its commercial graphics business will not be affected by the economic downturns that usually plague the business. In a statement given by its Chief Financial Officer, David Meline, in an industrial conference organized by Deutsche Bank in Chicago, "That is a business that tends to see early signs of either an upturn or an inflection down," yet, "We do continue to see steady growth with those businesses right now. We're watching them very carefully because we, too, see what's in the headlines ... but I can't say right now that we've seen any changes that are significant."
It may also interest you to know that Koninklijke Philips Electronics (NYSE: PHG) has recorded yet another iconic move with the relighting of the Corpus Christi Harbor Bridge with the latest innovation in LED lighting systems from its Color Kinetics spin-off. It was reported that Phillips emerged the winner of the project after its LED systems and those of its competitors were evaluated based on economical and technological viability and their ability to withstand the harsh Gulf Coast environmental conditions. News has it that the relighting of the bridge has improved the tourism sector of Corpus Christi and the economy at large. Thus, we can say that this is another testimony to the fact that Philips is a leader in the LED market.
Lastly, Siemens (NYSE: SI), through its Osram Sylvania unit, is playing an important role in helping Africans get access to electricity with the aid of a field of solar panels. This marks just one of its corporate responsibilities and it is not surprising that some analysts are backing the stock.
Conclusively, General Electric seems as close to a sure thing as you can get right now. Hence, barring any apocalyptic occurrence, General Electric will surely stand tall among equals and reward investors with great value.
jewishitalian31 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend 3M Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.