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VIVENDI TO WITHDRAW FROM WATER BUSINESS
DECEMBER 2002 ISSN 1365-6937
NEWS
MIGHTY GE BUYS OSMONICS FOR US$253M GE Power Systems, a division of General Electric Co (GE), is to acquire Osmonics Inc for around US$253 million in stock and cash. Osmonics will be merged with GE Power Systems’ GE Water unit as a wholly owned GE subsidiary. GE Water, based in Guelph, Canada, comprises Glegg Water Systems, GE Water Services and E-Cell Corp (electrodeionization). Together, they serve the US$4 billion industrial water services market of power, semiconductors, electronics, petrochemicals, oil and gas, pulp and paper, food and beverage, pharmaceuticals and health care. In April 2002, GE’s US$1.8 billion acquisition of the chemical water treatment company BetzDearborn Inc launched GE into a new sector and added US$1 billion in annual sales to the GE Specialty Materials group. “The fit between GE Water and Osmonics will allow us to better serve the water needs of our global customers,” said John Rice, president and CEO of GE Power Systems. “By combining Osmonics’ excellent technology and engineering resources with the complementary capabilities of GE
Water, we will create an even broader portfolio of products and services. “In addition, we are excited about the commercial synergies with GE Betz and GE Consumer Products,” he said. Osmonics, headquartered in Minnetonka, Minnesota, was founded in 1969 in the garage of Dean Spatz, the company’s chairman and CEO. He and his wife jointly own about 13% of the business, which had sales of US$207 million in 2001. “We have led technological advancement within the fluid filtration and separation industry, and expect to continue to do so under GE’s leadership,” said Spatz, who plans to stay with GE for the immediate future. Osmonics has made major investments in its Minnetonka plant. Recently, some US$8 million has gone into a computerized business management system using enterprise resource planning. In 1999, Spatz promoted Edward Fierko to president and chief operating officer, and hired chief financial and technical officers. The company has been working on a threeyear restructuring effort that closed five plants, moved product lines and eased back on the head count to around 1200.
This succeeded in cutting US$44 million from annual costs, and for the nine months ended 30 September 2002, Osmonics’ net income rose 47% to US$7.4 million while sales crept up 2% to US$157 million. Osmonics’ shareholders will receive the equivalent of US$17.00 of GE common stock for each Osmonics share. They may also choose to receive US$17.00 in cash per share, provided the total cash payout does not exceed 55% of the acquisition price. GE’s offer was 26% higher than Osmonics’ US$13.50 closing price before the announcement, but slightly below its 52-week high of US$17.50 in May. News of the takeover pushed shares up 24% to US$16.75. The acquisition, which is subject to shareholder and government approval, is expected to close in the first quarter of 2003.
COMMENT The latest in a five-year trend to water-treatment consolidation has been described by analysts as a classic ‘win–win’ development for both companies. Osmonics gets the resources it requires to grow. GE, with its broadening portfolio, acquires a new geographic market base, strong niche sectors and new customers. ■
VIVENDI TO WITHDRAW FROM WATER BUSINESS Vivendi Universal (VU) has sold half of its 40.4% stake in Vivendi Environnement (VE) to a group of French investors for US$1.9 billion, and says it plans to exit the environment business by the end of 2004. The 17 new investors, which include Electricité de France and the Caisse des Dépôts et Consignations, will take over VU’s commitment not to dispose of the shares before 21 December 2003. Each VE share sold carries an option to buy another before the end of 2004; if these options are exercised, VU will be out of the water business within two years. Vivendi Environnement started out in 1853 as the water distribution company Générale des Eaux. The company soon moved into wastewater treatment, and later acquired waste management, energy and transport interests. USFilter was brought into the fold in 1999. The VE sell-off is one of many rapid asset sales under the guidance of Jean Rene Fourtou, VU’s chairman, that have raised 5 billion for the conglomerate since 1 July 2002. Fourtou’s predecessor, Jean-Marie Messier, left the company with huge debts after a media spending spree. The sale of VE will make VU a pure media business.
CONTENTS COMPANY PROFILE 5–6 COMPANY WATCH 7–9 DIARY 15 DIVIDENDS 14 ECONOMIC REVIEW 14 IN BRIEF 12,14 MARKET PROSPECTS 2–4 NEWS 1,13,16 ORDERS 11 PEOPLE 12 PERSPECTIVE – DRY AS DUST? 10 STOCK WATCH 15 ISSN 1365-6937/02/$22.00 © 2002 Elsevier Science Ltd. All rights reserved. This journal and the individual contributions contained in it are protected under copyright by Elsevier Science Ltd, and the following terms and conditions apply to their use: Photocopying Single photocopies of single articles may be made for personal use as allowed by national copyright laws. Permission of the publisher and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery. Special rates are available for educational institutions that wish to make photocopies for non-profit educational classroom use.
NEWS
MIGHTY GE BUYS OSMONICS FOR US$253M GE Power Systems, a division of General Electric Co (GE), is to acquire Osmonics Inc for around US$253 million in stock and cash. Osmonics will be merged with GE Power Systems’ GE Water unit as a wholly owned GE subsidiary. GE Water, based in Guelph, Canada, comprises Glegg Water Systems, GE Water Services and E-Cell Corp (electrodeionization). Together, they serve the US$4 billion industrial water services market of power, semiconductors, electronics, petrochemicals, oil and gas, pulp and paper, food and beverage, pharmaceuticals and health care. In April 2002, GE’s US$1.8 billion acquisition of the chemical water treatment company BetzDearborn Inc launched GE into a new sector and added US$1 billion in annual sales to the GE Specialty Materials group. “The fit between GE Water and Osmonics will allow us to better serve the water needs of our global customers,” said John Rice, president and CEO of GE Power Systems. “By combining Osmonics’ excellent technology and engineering resources with the complementary capabilities of GE
Water, we will create an even broader portfolio of products and services. “In addition, we are excited about the commercial synergies with GE Betz and GE Consumer Products,” he said. Osmonics, headquartered in Minnetonka, Minnesota, was founded in 1969 in the garage of Dean Spatz, the company’s chairman and CEO. He and his wife jointly own about 13% of the business, which had sales of US$207 million in 2001. “We have led technological advancement within the fluid filtration and separation industry, and expect to continue to do so under GE’s leadership,” said Spatz, who plans to stay with GE for the immediate future. Osmonics has made major investments in its Minnetonka plant. Recently, some US$8 million has gone into a computerized business management system using enterprise resource planning. In 1999, Spatz promoted Edward Fierko to president and chief operating officer, and hired chief financial and technical officers. The company has been working on a threeyear restructuring effort that closed five plants, moved product lines and eased back on the head count to around 1200.
This succeeded in cutting US$44 million from annual costs, and for the nine months ended 30 September 2002, Osmonics’ net income rose 47% to US$7.4 million while sales crept up 2% to US$157 million. Osmonics’ shareholders will receive the equivalent of US$17.00 of GE common stock for each Osmonics share. They may also choose to receive US$17.00 in cash per share, provided the total cash payout does not exceed 55% of the acquisition price. GE’s offer was 26% higher than Osmonics’ US$13.50 closing price before the announcement, but slightly below its 52-week high of US$17.50 in May. News of the takeover pushed shares up 24% to US$16.75. The acquisition, which is subject to shareholder and government approval, is expected to close in the first quarter of 2003.
COMMENT The latest in a five-year trend to water-treatment consolidation has been described by analysts as a classic ‘win–win’ development for both companies. Osmonics gets the resources it requires to grow. GE, with its broadening portfolio, acquires a new geographic market base, strong niche sectors and new customers. ■
VIVENDI TO WITHDRAW FROM WATER BUSINESS Vivendi Universal (VU) has sold half of its 40.4% stake in Vivendi Environnement (VE) to a group of French investors for US$1.9 billion, and says it plans to exit the environment business by the end of 2004. The 17 new investors, which include Electricité de France and the Caisse des Dépôts et Consignations, will take over VU’s commitment not to dispose of the shares before 21 December 2003. Each VE share sold carries an option to buy another before the end of 2004; if these options are exercised, VU will be out of the water business within two years. Vivendi Environnement started out in 1853 as the water distribution company Générale des Eaux. The company soon moved into wastewater treatment, and later acquired waste management, energy and transport interests. USFilter was brought into the fold in 1999. The VE sell-off is one of many rapid asset sales under the guidance of Jean Rene Fourtou, VU’s chairman, that have raised 5 billion for the conglomerate since 1 July 2002. Fourtou’s predecessor, Jean-Marie Messier, left the company with huge debts after a media spending spree. The sale of VE will make VU a pure media business.
CONTENTS COMPANY PROFILE 5–6 COMPANY WATCH 7–9 DIARY 15 DIVIDENDS 14 ECONOMIC REVIEW 14 IN BRIEF 12,14 MARKET PROSPECTS 2–4 NEWS 1,13,16 ORDERS 11 PEOPLE 12 PERSPECTIVE – DRY AS DUST? 10 STOCK WATCH 15 ISSN 1365-6937/02/$22.00 © 2002 Elsevier Science Ltd. All rights reserved. This journal and the individual contributions contained in it are protected under copyright by Elsevier Science Ltd, and the following terms and conditions apply to their use: Photocopying Single photocopies of single articles may be made for personal use as allowed by national copyright laws. Permission of the publisher and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery. Special rates are available for educational institutions that wish to make photocopies for non-profit educational classroom use.