I've owned this one before. Unfortunately that was two years ago. Nice premium and a cash deal! GE also picked up the Water business of HPC of witch I still own shares.
NEW YORK (CBS.MW) - General Electric agreed Wednesday to buy water treatment company Ionics Inc., paying $1.1 billion cash, a 48 percent premium to Ionics' previous day's closing share price.
Ionics (ION: news, chart, profile) will be incorporated into Wilton, Conn.-based GE Infrastructure, which owns water purification businesses and industrial technology companies.
GE (GE: news, chart, profile) will pay $44 per share in cash, well above Ionics closing price Tuesday of $29.75. GE will also assume Ionics existing debt.
Shares of Ionics shot up more than 45 percent, closing at $43.28. GE shares fell 17 cents to $35.64.
Ionics designs water purification systems for desalination, recycling and industrial uses.
GE is betting on the global need for desalinization and water purification in the U.S., Caribbean and developing areas of the world, said Bill Woodburn, president and chief executive of GE Infrastructure.
GE was attracted to Ionics' reverse osmosis desalinization capability because "they are probably the best at it in the world," especially in areas where high quality drinking water is scarce, Woburn said.
Ionics also has a fleet of mobile units that supply power plants, refineries and chemical plants with ultra-pure water during emergencies or maintenance shutdowns.
Investors interest in the water treatment industry is bound to increase over the next several quarters as the need for desalinization plants grows, said Michael Sheldon, chief market strategist for Spencer Clarke LLC.
Buyers drove up the shares of water treatment company Cuno Inc. (CUNO: news, chart, profile) by $1.02 Wednesday, or 1.7 percent, and have sent its price up 46 percent in the last year, leaving Ionic a more favorable target.
"Ionics has really lagged the group over the last few years," said Sheldon.
Goldman, Sachs & Co. and UBS Investment Bank advised Ionics on the deal.
At least two-thirds of Ionics shareholders must approve the merger, which should close in the first half of 2005. Ionics, based in Watertown, Mass., said an unnamed group holding roughly a 20 percent stake in Ionic -- about 4.5 million shares -- had agreed to the merger.
That stake is believed to be held by Ecolochem Inc., a company Ionics acquired in November 2003 for $200 million in cash and 4.9 million shares.
The deal was GE's second all-cash deal this week. On Monday, the conglomerate, a member of the Dow Jones Industrial Average, agreed to buy the transportation and finance business of CitiCapital for $4.4 billion.
That deal puts the former Citigroup (C: news, chart, profile) unit into GE Commercial Finance, which finances 190,000 heavy and medium duty commercial trucks. |
