The General Electric Co. PLC Monday purchased networker FORE Systems Inc. for $4.5 billion in a stock deal in an attempt to capitalize on the Internet’s rapid growth.
The $35 a share purchase price represents a 43 premium over Fore’s closing price on Friday. GEC, which has no connection to the U.S.-based General Electric, said Fore will allow it to expand its network switching product line and will strengthen its presence in the United States.
In addition, GEC said the deal will help it gain access to the enterprise networking market and to enhance its product line and technology expertise.
“This acquisition reinforces our position as a leading supplier of voice and data networking technology,” said George Simpson GEC’s chief executive officer. “The purchase of FORE Systems provides us with access to new markets and new customers and extends our product portfolio into the increasingly important ATM and IP switching sector. We will now be in a position to capture the full benefits of the impact of the explosive growth of the Internet.”
Thomas J Gill, FORE’s president and chief executive officer, said the combination will create one of the world’s leaders in networking and telecommunications equipment.
“Together we can provide our customers with a comprehensive range of integrated solutions to accommodate the rapid growth of high-speed data, voice and video services on a global basis,” he said.
Gill will remain FORE’s president and CEO and will report to George Simpson, GEC’s chief executive officer. FORE will operate as a wholly-owned subsidiary of GEC and its corporate name will not be changed.
GEC expects the acquisition will not dramatically affect its earnings over the short term and will start contributing to earnings in March 2000.