$580-Million Deal to Boost Presence of GE in Europe

America’s General Electric Co. has strengthened its European foothold ahead of 1992 by stepping into a complex electronics industry takeover battle and emerging with an agreement with Britain’s General Electric Co. to merge European operations.

The U.S. and British companies, previously unrelated, announced on Friday that they had reached agreement to merge their European consumer products, medical equipment and some electrical divisions.

American and Japanese companies are eager to expand operations in Europe before 1992, when the 12-nation Common Market is to be transformed into one barrier-free marketplace of 320 million people.

GE, the U.S. company, is paying GEC $580 million to create the joint operations, which will have annual revenue of about $2.45 billion.

GE’s arrangement with GEC fits a strategy followed by many non-European companies, which are concerned that 1992 might see the emergence of a “Fortress Europe,” shutting them out of the huge, lucrative market.

“What it (GE) has done is significantly increase the size of its business in Europe by this deal,” said analyst Keith Sykes of the London investment firm Smith New Court. “The prime reason is 1992.”

GE and GEC were founded independently a century ago and have grown into the largest electronics companies in their own countries.

GE, which held a minority stake in GEC from 1928 until 1934, is much larger, with annual revenue of $40.5 billion in 1987.