General Electric Global Exchange Services (GXS) announced today that it is being acquired by Francisco Partners, a technology buyout fund.
Francisco Partners, of Menlo Park, Calif., is expected to pay about $800 million for GXS.
The transaction is expected to close by Halloween.
Including its former incarnation as GE Information Services, GXS has been a division of GE for 36 years, according to Harvey Seegers, president and CEO of GXS.
About six years ago, Information Services began focusing on the emerging e-business sector and morphed into GXS, which provides business-to-business services and software.
GXS has evolved into one of the largest B2B e-commerce networks in the world, with more than 100,000 trading partners.
However, GXS no longer fits GEs strategic model, which is okay with Seegers.
"I am extremely pleased to be a freestanding company and not to be a small part of a huge company," said Seegers in Gaithersburg, Maryland.
As a part of the Francisco Partners technology portfolio, GXS will have the nimbleness and flexibility to acquire and keep new talent, and to acquire new technology, says Seegers.
"We will look to synergistic acquisitions in the world of B2B e-commerce," said Seegers, who will stay on as CEO with the new company. "Were not looking to change our business model, and were not looking to go that far a field."
Global Exchange Services – theyll drop the GE part of the moniker, even though GE will maintain a ten percent stake in GXS – will focus on services around collaboration, negotiations and transactions in the supply chain.
The company, which considers its biggest competitor IBM in the EDI translation market, will also look to XML and Web Services to be part of its future.
The sale of GXS comes as a surprise.
The company has 60 percent of its customer base hailing from Fortune 500 companies and their suppliers, with the other 40 percent coming from the GE Global Supplier Network – GEs mandated program for suppliers to transact with GE electronically.
Those suppliers will remain with GXS, according to Seegers.
GXS, for its part, will remain at its current location and has no plans for layoffs, according to Seegers.
When completed, the divestiture is expected to result in a pretax gain of about $500 million for GE, according to officials.
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