GE M&A to focus on data analytics

May 10
9:14 AM 2012

General Electric Co (GE.N) could invest up to $1.5 billion to boost its presence in the software and data-analytics sector, including spending on hiring and small takeovers, a top executive said.

The goal is to find ways to extend the time its gas turbines, jet engines and other heavy equipment can run without unscheduled maintenance -- a development that would improve efficiency for its customers and save GE money as it typically sells the equipment along with maintenance contracts.

"For us, it's a talent game. How do we acquire talent?" said Bill Ruh, a GE vice president who the company hired from Cisco Systems Inc (CSCO.O) with the charge of building GE's data-analytics business.

The interest in tech acquisitions, which Chief Executive Jeff Immelt alluded to in a presentation in New York last week, marks a new thrust for GE, the largest U.S. conglomerate. Ruh noted that the individual deals GE strikes will likely be small, with no one deal representing more than 10 percent of the overall $1.5 billion GE plans to invest in the sector over the next three years.

Ruh is also overseeing the build out of the company's new software development center in San Ramon, California.

"We're analyzing what has been happening in the venture capital community and there has been a lot of money going into these companies," Ruh said in an interview on the sidelines of a conference at the Massachusetts Institute of Technology on the future of manufacturing.

One example of that investment flow is Splunk Inc (SPLK.O), which last month raised $229.5 million in an initial public offering and has since seen its shares roughly double in value.

"There are a lot of companies that are doing consumer analytics, financial analytics," Ruh said. "The industrial space seems to be the place that most haven't gotten to yet."

GE executives have repeatedly said their top capital allocation plans for the year are boosting the company's dividend and buying back shares. After an $11 billion wave of energy-sector deals in 2010 and 2011, GE has largely stepped back from large-scale acquisitions over the past year.

On Monday it said it would spend about $535 million for a 15 percent stake in China XD Electric Group (601179.SS) to gain a larger foothold in China's electrical infrastructure market.

This article is copyrighted by Reuters

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