CORRECT: GE To Buy Mining Supplier Industrea For About A$470 Million

General Electric Co. (GE) has moved to bolster its footprint in the fast-growing mining equipment sector, agreeing to buy Australia's Industrea Ltd. (IDL.AU) for about A$470 million ($466 million) as well as an independently owned U.S. supplier for an undisclosed amount.

Industrea's board in a separate statement Wednesday said it is unanimously recommending the cash offer, although it has negotiated to sell its mining services division separately in the hope of attracting a higher price.

GE said the acquisitions will increase its exposure to the $61 billion global mining equipment industry, and it will be able to expand the two regionally focused companies to reach a global customer base. Both will benefit from the industrial conglomerate's lean manufacturing and global supply chain management, it said.

The two companies will become part of GE Transportation's global mining business.

Industrea, which operates from seven locations in resource-rich Australia and has a significant presence in China, said the A$1.27 per share bid represented a 48% premium to the last closing price for the company's shares. New of the offer buoyed the shares, which at 0210 GMT were trading 44% higher at A$1.235.

Robin Levison, chief executive of the Australian company, told reporters during a conference call that negotiations with GE had taken place over the past few weeks before the U.S. company secured the backing of Industrea's board, in the absence of a higher offer.

Mr. Levison said GE's focus clearly is on mining equipment, and Industrea's board believes there may be a suitor willing to pay more for the services operations. He declined to say whether Industrea has received any approaches, but added that if a higher bid for the division is received then the bid amount will be subtracted from the A$1.27 bid price GE will have to pay and if no better offer is received then the unit will remain part of Industrea and join GE.

The value of the services division is included in the A$1.27 offer, but isn't being disclosed, a spokesman for Industrea said. GE's offer values Industrea at about A$700 million, including debt.

Lorenzo Simonelli, president and CEO of GE Transportation said: "We believe that Industrea's business can grow more rapidly by expanding its product suite and geographic reach combined with GE's technical expertise and global customer relationship."

Industrea said it is expecting net profit this financial year of between A$40 million and A$45 million, down from A$47.9 million the year before.

GE has also signed a binding agreement to buy Virginia-based Fairchild International, which it said manufactures a range of underground mining equipment. GE said it will grow the independent company's focus beyond the U.S.

-By Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail]