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Businessexcellence May 07 18

tomography (CT) technology for airport baggage inspection. These are not small deals either. In January this year GE announced an agreement to purchase UK-based Smiths Aerospace, which supplies integrated systems for aircraft manufacturers and components for engines, for $4.8 billion in cash. The acquisition will broaden GE’s offerings for aviation customers by adding Smiths innovative flight management systems, electrical power management, mechanical actuation systems and airborne platform computing systems to GE Aviation’s commercial and military aircraft engines and related services. Who would bet on that being a failure? GE chairman and CEO Jeff Immelt is certainly confident about it. “This acquisition is consistent with our strategy to invest in hightechnology infrastructure businesses that deliver strong growth, earnings expansion and higher margins,” he said at the announcement. “GE Aviation is growing about 10 percent a year and this acquisition gives us a technology growth platform that will be accretive to our net income and will deliver immediate and future value for our investors.” The biggest and most complex acquisition in the consumer packaged goods industry, Procter & Gamble’s purchase of Gillette, is widely expected to succeed. All the ingredients are there. Complementary products, similar corporate cultures, and the retention of key Gillette personnel add up to that magical word, synergy. GE’s combination of vast numbers of acquisitions with superior growth begs the question of whether the alleged high failure rate is a myth rather than a reality. For there to be any credence in it at all, GE would have to be an exception to the trend, leaving little room for success anywhere else. proved to be very productive, and after further investment, gave Littelfuse a manufacturing facility in Asia that it would never have been able to create from a Greenfield site. For Littelfuse, acquisition is entirely about strategy, stretching the boundaries of technology and market position. For others, it can be a matter of pure survival. Tony Makuch, chief operating officer of FNX Mining, told me recently about the “nickel wars” of 2006, which resulted in the acquisition of Falconbridge by Swiss-owned Xstrata, and INCO being purchased by the Brazilian Companhia Vale do Rio Doce (CVRD), leaving FNX Mining as the only Canadian owned mining company in the Sudbury Basin. FNX managed somehow to keep its head below the parapet during the nickel wars, and is now itself acquiring properties from other companies in the Sudbury basin. It’s a question of whether you want to be a diner, or dinner. “This is a time for mergers and acquisitions,” said Makuch. “You either become dinner, if somebody comes and eats you up, or you become a diner and you eat somebody else. Eat or be eaten works in mining just like it works anywhere else.” A giant of business dining is GE, a multi-business company renowned for double digit growth that makes a hundred or so acquisitions every year. Established already in markets as diverse as light bulbs, aircraft engines, financial services, gasfired power stations and high tech medical scanning equipment, GE is always on the look out for new technologies that offer the opportunity to outperform the market. GE has expanded in recent years into security equipment, water treatment and wind power. In the security arena, the star purchase was InVision Technologies in December 2004, the company that developed the first computed Strategic management May 07 Businessexcellence 19