Britain’s General Electric to Buy Fore Systems of U.S.

Britain’s General Electric agreed on Monday to pay $4.5 billion in cash for Fore Systems Inc., extending its push into the fast-growing U.S. market for communications equipment.

Warrendale, Pa.-based Fore makes advanced computer-networking switches used by phone companies to combine data with regular phone traffic. London-based GEC, which is not connected to U.S. conglomerate General Electric Co., will pay $35 a share, 43% more than Fore’s Friday close.

GEC is shedding its defense business to focus on networking equipment. It kicked off the strategy last month with the $2.1-billion purchase of U.S.-based Reltec Corp. While Fore provides a key data-networking product, GEC still lags Alcatel and rival European equipment makers in the range of gear it can offer.

Buying Fore gives GEC some of the most sophisticated asynchronous transfer mode, or ATM, switches sold to phone companies. The company’s switching equipment is used by businesses such as Delta Air Lines Inc., phone companies such as GTE Corp. and Internet service providers such as UUNet Technologies Inc.

GEC said it expects the purchase to have little effect on earnings per share for the year ending March 31, 2000, when writedowns of intangible assets are excluded.

“We will now be in a position to capture the full benefits of the impact of the explosive growth of Internet and other data traffic,” GEC Chief Executive George Simpson said.

Fore, which had sales of $632 million in the year ended March 31, will operate as a wholly owned unit of GEC. Tom Gill will continue as Fore Systems’ chief executive and president, reporting to GEC’s Simpson.

The transaction is expected to be completed in June.

The news sent Fore’s shares up $9.25 to close at $33.75 in heavy trading on Nasdaq. GEC’s American depositary receipts rose 75 cents to close at $10.13 in over-the-counter trading.