Diversified U.S. manufacturer United Technologies Corp said it will buy General Electric's security business for $1.82 billion in a move to expand the presence of the world's top maker of elevators and air conditioners in a fast-growing North American sector.
The purchase will be neutral to United Tech's 2010 earnings, after restructuring and transaction costs and will add to earnings in 2011 and beyond helped by cost cuts, United Technologies' Chief Executive Louis Chenevert said in a statement on Thursday.
The security business is on track to generate about $1.2 billion in revenue this year, according to a source briefed on the business who was not authorized to discuss that detail publicly.
GE Security, part of GE Technology Infrastructure, has about 4,700 employees in 26 countries. It sells equipment used in commercial and residential buildings to detect fires, break-ins and other security breaches.
GE, the largest U.S. conglomerate, is in the midst of a major streamlining, including exploring options for its NBC Universal media business and cutting back its GE Capital finance unit.
The company could sell off businesses generating $25 billion to $30 billion in revenue -- about one-fifth of its operations -- over the next two to three years, wrote Bernstein Research analyst Steven Winoker in a recent note to clients.
GE shares eased 9 cents to $15.74 in premarket trading.
This marks the first time United Tech has bought a unit from GE since 2001, when GE tried to box out United Tech in a bid for Honeywell International Inc, a United Tech spokesman said. GE successfully outbid its Connecticut rival but the deal was ultimately quashed by regulators.