Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: who cares? who wrote (32140)	4/26/1999 12:40:00 PM
From: HarryF	Respond to of 90042

FORE - per Bloomberg - the deal will be closed in JUNE: bloomberg.com Top Financial News Mon, 26 Apr 1999, 12:31pm EDT U.K.'s GEC to Buy FORE Systems for US$4.5 Bln, Gain in Internet Equipment U.K.'s GEC Agrees to Buy FORE Systems for $4.5 Bln (Update1) (Adds analyst quote in 4th paragraph, background, details.) London, April 26 (Bloomberg) -- General Electric Co. Plc, the U.K.'s largest electrical engineering company, agreed to pay $4.5 billion in cash for FORE Systems Inc. to gain a stronger presence in Internet equipment. GEC will pay $35 per share, a 43 percent premium to FORE's closing share price on Friday. GEC, which agreed in January to sell its defense-electronics business to British Aerospace Plc, is remaking itself as a communications equipment manufacturer. Last month it agreed to buy U.S.-based Reltec Corp. for $2.1 billion in cash and assumed debt, to gain a North American presence. ''They have decided to try and become a telecom manufacturing giant,'' said Howard Wheeldon, an analyst at Matheson Investment Management. ''The strategy seems to be to broaden its telecom equipment business.'' GEC shares rose as much as 26 pence, or 4.49 percent, to 605 pence ($9.76). FORE shares rose 7/16 to 24 15/16 when trading in the shares was halted. Pittsburgh-based FORE Systems makes switching equipment used by phone companies and Internet service providers. It will continue to operate under the name FORE Systems and will cooperate with GEC's Marconi Communications unit. Explosive Growth The acquisition comes as other European telecom equipment companies, such as Ericsson AB, Alcatel SA, and Nokia Oyj, all hunt for U.S. Internet equipment companies to gain a stronger position in the rapidly growing market. ''We will now be in a position to capture the full benefits of the impact of the explosive growth of Internet and other data traffic on the demand for communications equipment and systems,'' GEC Chief Executive George Simpson said in a statement. GEC said it expects the purchase to have little effect on earnings per share for the year ending March 31, 2000, when write- downs of intangible assets are excluded. In the following years the purchase is expected to improve earnings. FORE reported sales of $632 million for the year to March 31 and had net assets of $680 million, including cash and short-term investments of $361 million. Tom Gill will continue as FORE Systems' chief executive and president and will report directly to GEC's Simpson. GEC will pay for the purchase out of existing cash resources. The transaction is expected to be completed in June.