GE expected to target USD 5bn on energy, oil and gas sectors, industry sources say23 January 2008

General Electric is expected to target its USD 5bn acquisition war chest this year on the energy, oil and gas, and aviation sectors, according to an analyst and industry sources.
Targets could include Houston-based Cameron International and Nevada-based Ormat Technologies, according to industry sources.
GE chief executive Jeff Immelt told investors at the company’s annual outlook meeting in December that it planned to spend about USD 5bn on acquisitions in 2008.
That war chest was enhanced 1 January when mortgage and vehicle fleet company PHH announced the termination of its USD 1.9bn sale to GE and Blackstone Group after the buyout firm failed to secure financing for the deal. A GE spokesperson said the company had not yet commented on what it will do with the funds earmarked for PHH.
An analyst predicted that GE would likely continue to target the aviation, energy, and oil and gas sectors it focused on in 2007.
A GE executive said recently that the conglomerate had talked to Ormat Technologies, the listed Nevada-based geothermal power company, and that it is looking at the wind space. Ormat Technologies, however, which is about 28%-owned by Ormat CEO Dita Bronicki and her husband, has long resisted relinquishing control.
The conglomerate could also target Houston-based Cameron to complement its purchase last year of Vetco Gray, a subsea oil and gas drilling equipment supplier, according to industry executives and recent speculation on an Internet message board.
In the wake of GE's Vetco deal last January, oil executives said they expected GE to further consolidate subsea equipment companies. An insider at a major subsea services provider this week said GE was expected to target Vetco’s competitors as a way of propelling itself to the top spot in subsea drilling.
Vetco Gray is in the third spot with a 17% market share behind FMC Technologies with 40% and Cameron with 26%. Aker Kvaerner and Dril-Quip trail Vetco with 13% and 4% respectively.
Investors on an internet message board speculated this week that Cameron was a target for GE because its businesses fit well with GE's oil and gas, transportation, compressors, and locomotives businesses.
Scott Amann, Cameron’s vice president of investor relations, declined to comment, saying: “Selling to GE – that deals with the realm of speculation.” He also dismissed suggestions that upcoming management changes could leave Cameron vulnerable to a takeover as “speculation.” Cameron’s president and chief operating officer Jack Moore will replace Sheldon Erikson as CEO in April.
An FMC spokesperson declined to comment on GE as a potential buyer, while Dril-Quip executives did not return calls.
Last year, the conglomerate’s infrastructure subsidiary paid USD 4.8bn for Smiths Aerospace, an aircraft control and diagnostic systems maker; USD 1.9bn for Vetco Gray; and offered USD 582m for UK-based Sondex, a supplier of downhole technology to the oil and gas industry.
The analyst said GE would spend 2008 repairing its healthcare business rather than making any acquisitions in that space.

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