GENERAL ELECTRIC FOCUSES ON EUROPEBy: Siddharth Dasgupta 09EM-033

Saurabh Tiwari 09EM-031 & Saurabh Gupta 09EM -030

A humongous conglomerate

“Imagination at Work”

Acquisitions (primarily in healthcare)

• Jeff Immelt, the chairman and CEO of GE emphasizes on‘small, where we should be big.• UK was GE’s third biggest market after US and Japan, but Immelt has a desire to expand it more quickly in Europe than in USA.• Made an offer to Amersham of £ 5.7 bn, the british healthcare sector company.• Just acquired Finland’s Instrumentarium, a medical Instrument business.• In most sectors, GE generally had half the market share in Europe than it did in the USA.• GE had an eye on the most attractive sectors – hence its interest in Healthcare.

Yesteryears

Before he became GE chairman, Immelt used to run GE medical operations. He had a vision for healthcare which he very much shared with Sir William Castell, Amersham’s CEO for 14 years.

The plan was to combine amersham with GE medical systems (which made MRI CT scanning systems ) to form GE healthcare

The hope was to capitalize on the emergence of ‘personalized madicine’.

Despite the fact that Amersham was only one third of the size of GE medical systems, the business was to be headed by Castell – appointed as Vc. Pres. In the board.

GE stock @ 800p (€12), Amersham shareholders unlikely to be disappointed, whereas analysts predicted it to be around 720p.

GE’s willingness to pay the price probably reflected the need to keep the GE earnings machine moving ahead in a weak home economy.

Amersham was unlikely to be GE’s last development in the healthcare sector or in Europe.

For GE’s operations to match those in the USA, it would need to increase annual sales by $25bn – a gap equivalent to 30 Amershamns

Questions to ponder

Why was GE choosing to develop into Europe?

What can be the advantages and disadvantages of market acquisitions?

How could GE avoid some of the disadvantages?