IT Investment Firm Buys 90% Of GE Unit

IT investment firm Francisco Partners has paid $800 million to buy 90% of General Electric Co.'s business-to-business trading exchange and exchange-services business, GE Global eXchange Services. Harvey Seegers, president and CEO of GE Global eXchange Services, will remain in that post under the new ownership.

David Stanton, a partner at Francisco Partners, in Menlo Park, Calif., says GXS, which offers technology services to trading exchanges and operates private exchanges, will expand that business by acquiring other electronic commerce companies and hiring additional technology experts. Francisco Partners specializes in acquiring technology companies through buyouts.

General Electric, in Fairfield, Conn., this week says it's divesting itself of all but 10% of GXS because it doesn't fit the company's growth strategies for its core businesses--manufacturing and financial services. Seegers says Global eXchange Services, as the company will be named, will retain its focus on business-to-business supply-chain services. "We continue to think that supply-chain management is the place where companies can most quickly improve their bottom line," he says.

GXS currently boasts more than 100,000 customers and posted revenue of $450 million in 2001. GE, which was responsible for about 5% of GXS's revenue last year, will remain the company's largest customer.

The boards of directors of both companies have approved the agreement, and the transaction is expected to close by November. GE is a diversified global manufacturer, financial-services company, and owner of the NBC television network. When completed, the divestiture is expected to result in a pretax gain of approximately $500 million to GE.