NEW YORK – General Electric is preparing to buy more mining-equipment and services companies as it creates a new unit using the blueprint for doubling oil and gas revenue in four years.
The division should reach $5 billion in sales within a few years, said Lorenzo Simonelli, chief executive officer of GE Transportation, of which the business will be a part. GEs current mining offerings generated about $2 billion last year, according to the Fairfield, Conn.-based company.
GE CEO Jeffrey Immelt bulked up his energy portfolio with more than $11 billion in purchases in a six-month spree that ended in March 2011. Now hes betting on rising demand for commodities from copper to coal even as miners such as BHP Billiton, the worlds largest, delay spending on projects and Chinas fast-growing economy shows signs of faltering.
It is a good a time to be looking at acquisitions in a value sense, GE Mining CEO Geoff Knox said in a telephone interview. We have to be targeted in buying into spaces that leverage what we already do. We want to use our current knowledge and add it to the product line were acquiring and make it smarter and more appealing.
GE Mining will be based in Brisbane, Australia, home to 2012 acquisition Industrea Ltd. The unit was scheduled to be unveiled Monday at the MINExpo industry exhibition in Las Vegas, where the participants include Caterpillar Inc., the worlds biggest maker of mining and construction equipment.
Immelts creation of GE Mining comes as acquisitions in the industry accelerate, according to data compiled by Bloomberg. Buyers have announced at least $4.15 billion of takeovers of mining equipment and services companies in 2012, 52 percent more than a year earlier, the data show.
Mining and construction equipment makers around the globe with a market value of $1 billion or more trade at a median 12.6 times earnings, according to data compiled by Bloomberg. That compares with a 13.9 multiple for the MSCI All Country World Index, which tracks 2,245 companies in developed and emerging markets.
GE, which has operations in Fort Wayne, already offers products and services to mining companies, including water desalination systems and electrical turbines derived from jet engines, of which GE Aviation is the largest manufacturer. GE Mining will seek to expand its existing lines as well as make acquisitions, Simonelli said.