General Electric to Purchase Ionics Inc. for 3.17 Times Revenue

Weekly Corporate Growth Report, Nov 29, 2004

The Deal: General Electric Company has agreed to acquire Ionics Inc. for $1.1 billion in cash. GE will also assume about $200 million in debt. The deal values Ionics at $44 per share, a premium of almost 48 percent over the company's recent closing prices. The transaction remains subject to shareholder and regulatory approvals. The deal is expected to close in the first half of 2005. After the deal closes, Ionics will become part of GE Infrastructure's water and process technologies unit.

Discussion: Ionics Inc. supplies water-treatment and water- Λ purification systems to consumer, industrial, municipal, and utility customers around the world. The company has over 50 years experience developing water treatment and waste- ' water treatment systems. The company's products include desalination systems, industrial purification systems, and consumer products such as home filters. Ionics also develops measuring devices used to monitor water quality for environmental regulations.

General Electric Company produces aircraft engines, locomotives, and other transportation equipment; household appliances and lighting; electric distribution and control equipment; generators, turbines, and nuclear reactors; medical imaging equipment; and plastics. The company also provides financial services including commercial finance, consumer finance, equipment management, and insurance. GE's financial division is one of the largest financial services companies in the United States. The company also owns the NBC television network.