GE Claims 'Positive Return' on Unit Sale

FAIRFIELD, Conn. (TheStreet) -- General Electric (GE Quote) says it made money on its security unit, even though it looks to have paid significantly more to put the business together than the $1.8 billion it will get from its sale to United Technologies (UTX Quote).

GE's security unit was a roll-up of several companies it bought earlier this decade. These include Edwards Systems Technologies, for which it paid $1.4 billion in 2004; Interlogix, which cost $777 million in 2002; and InVision, which cost $900 million in 2005, according to press reports and Sterne Agee research; along with four smaller companies for which a price could not be determined.

That adds up to nearly $3.1 billion. Subtract $580 million, which is what GE got for selling 81% of its Homeland Protection unit to Safran, a French defense company, in April of this year. Also subtract $110 million, which is what the remaining 19% is presumably worth, since GE is keeping its stake.

The Homeland Protection unit was comprised of InVision and another business called Ion Track, which GE bought for an undisclosed price in 2002. Private equity firm Castle Harlan paid $30 million for a 50% stake in the business in 2000 before selling it to GE two years later, according to a 2002 article in Corporate Financing Week. In other words, InVision presumably represented a much larger portion of Homeland Protection's operations than Ion Track.

In sum, GE is getting $1.8 billion for a business that cost it more than $2.41 billion to put together through various acquisitions from 2002 to 2005. The $2.41 billion figure does not include the five small companies for which prices weren't available.