GE coverage round-up

Since this is looking like the biggest story - pageview-wise - of the past two years, I thought I'd add a little color by rounding up what other people have to say about it. Here's the Deal's take on things. Of course, I like it because they link back to Martha's interview with Dean Seavers, but I also think Kenneth Klee makes an interesting analogy with HD Supply:

A possibly parallel situation comes to mind in the attempt a fews ago of Home Depot Inc. (NYSE:HD), then being run by GE vet Bob Nardelli, to acquire its way into the contractor-supply business. HD Supply, of course, ended up being sold to a consortium of PE firms in 2007. It would be unwise to push the analogy too far. And GE and many others have, of course, used these tactics successfully in other areas. But both episodes underline the fact that whether it's economic conditions, the dynamics of the market being targeted, or internal hurdles to execution, there's a lot that can happen to trip up such efforts.

Exactly. It's one thing to consolidate for a big share of a part of the market, but to consolidate such disparate pieces as residential alarm, video, and fire was a tall order from the outset. Also, the Financial Times has independently confirmed that JP Morgan is helping conduct the sale. Here's what they have to say. Not much new here, except now Bosch is being thrown in the mix as a potential suitor:

People close to the sale process, which is being managed by JPMorgan, said the business had drawn interest from GE's rivals in the security sector such as United Technologies, Tyco and Germany's Robert Bosch.

I still don't think this makes sense. Why would these companies want what GE has? For the most part, they've already got competing brands and products. Sure, it consolidates the market, but is there value in simply putting your competitors out of business? You still need to see actual value, right? I'm surprised more people aren't talking about a venture firm like Blackstone being in the mix. They bought AlliedBarton - maybe they'd like to consolidate guarding and electronic security, right? Then spin that whole thing off in an IPO? They've got Dean Seavers on record saying he's going to grow sales to $3 billion by 2011. Why wouldn't an outside investor want to buy the property for $2 billion, then take it public for $3 billion? Well, here's FT's thoughts on that theory of mine:

Security assets have historically lured private equity buyers as well, but a combination of the difficult financing environment and an expressed interest by GE in selling the assets to a strategic buyer could hamper any buy-out effort.

There's also this little nugget I didn't know about:

GE suffered a setback this month when it agreed to a $50m settlement with the Securities and Exchange Commission over charges of accounting fraud in 2002 and 2003. GE did not admit nor deny the allegations, which prompted a four-year probe of accounting issues.

That's small change for GE, but the auditing and four-year probe sound nasty. The New York Times Deal Book blog doesn't really have anything new, other than to brag that it, too, confirmed the Bloomberg story. Good for them. Cyrus Sanati repeats the same claims that UTC and Tyco are potential suitors. He also throws this out:

Questions about what would happen to the rest of the security unit have lingered since the Homeland Protection deal was announced in April.

Is that really true? I haven't heard much about that, actually. In fact, notable about all the coverage is the incredibly tight lips at GE. Sure, they issued everyone a no comment, but doesn't one of these awesome blogger guys who cover the street have an inside source at GE who'll drop some unsourced quotes? Disappointing. I will note, selfishly, that my story on the GE sale is the only one to actually interview anyone with a name attached and at least give some background on why the GE Security unit maybe isn't performing all that well. It was pretty hard, though. I had to actually call people on the phone and take notes. I'm still sweating a little bit.