Technology investor to buy GE's e-commerce unit

NEW YORK: Conglomerate General Electric Co., shedding the bulk of a non-core

unit, on Monday sold its business-to-business e-commerce arm to technology

buyout fund Francisco Partners for $800 million.

GE said it would record a pretax gain of $500 million from the sale of 90 per

cent of GE Global eXchange Services, also known as GXS.

The unit helps companies buy goods and services from each other on the Web by

creating online marketplaces. Approximately 100,000 companies use GXS for more

than 1 billion transactions a year, GE said. Francisco Partners, of Menlo Park,

California, said it planned to build ailing GXS by buying similar companies and

hiring more technology professionals. The $2.5 billion fund invests in

technology and technology-related businesses.

In the first quarter, GXS posted an 84 per cent decline in profits from the

year-ago period, to $5 million, on a 38 per cent revenue drop to $105 million.

The boards of both companies have approved the deal, which is seen closing by

Oct. 31. Harvey Seegers, the president and chief executive of GXS, will continue

to head the company.

GXS began under a different name in the 1960s and developed BASIC, one of the

first computer languages. GE, which was advised by Morgan Stanley and law firm

Shearman & Sterling, said it will keep a 10 per cent ownership stake in GXS.

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