Industrea Soars 44% on GE Takeover Offer
General Electric Co. continues to bet big on Australia, pouncing on listed mining services firm Industrea.
Industrea jumped 43.6% to a one-year high of A$1.23 a share following a A$1.27 a share offer from General Electric Co. which values the company at around US$466 million. GE’s offer values Industrea at about A$700 million, including debt.
The offer — a 48% premium to Tuesday’s closing price — was recommended by Industrea’s board in the absence of a superior offer and subject to an independent expert concluding it is in the best interests of shareholders.
“Existing shareholders have had a nice kick today but whether there will be a bidding war is something I’d argue is less likely because the likes of the major mining manufacturers have plenty of organic expansion opportunities,” Moelis & Co. analyst Adam Michell told Deal Journal Australia.
 Reuters General Electric Chairman and CEO Jeff Immelt
“GE, as a new entrant, are willing to pay a full price to get this small yet established footprint in the mining equipment space,” he added.
But not everyone is convinced.
“It seems to be pretty opportunistic, management seems more focused on the recent share price rather than the long-term potential of the company in determining the real fair value,” said an analyst who declined to be named.
Industrea operates from seven locations in resource-rich Australia and has a significant presence in China. Its chief executive Robin Levison told reporters during a
conference call that negotiations with GE had taken place over the past few weeks before the U.S. company secured the backing of Industrea’s board, in the absence of a
higher offer.
Mr. Levison said GE’s focus clearly is on mining equipment, and Industrea’s board believes there may be a suitor willing to pay more for the services operations. He declined to say whether Industrea has received any approaches, but added that if a higher bid for the division is received then the bid amount will be subtracted from the A$1.27 bid price GE will have to pay and if no better offer is received then the unit will remain part of Industrea and join GE.
The value of the services division is included in the A$1.27 offer, but isn’t being disclosed, a spokesman for Industrea said.
Record Point and Norton Rose Australia are advising Industrea while UBS and King & Wood Mallesons are advising GE.
As the WSJ previously reported, GE is set to generate more revenue for the conglomerate this year than China, where the company has seen years of missed targets and slow growth. GE reported a 26% rise in first-quarter industrial revenue from Australia, versus an 18% rise from China.
The Ichthys liquefied natural gas project in the Timor Sea has generated some $1.1 billion in GE contracts for gas turbines, compressors and underwater production systems. Australia is also the second-biggest market for GE’s finance business after the U.S.
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