General Electric Company (GEC) Plc, the UK electronics group, has bought ATM-switch maker Fore Systems Inc for $4.5bn in cash, its second multi-billion acquisition of a high-end US communications equipment maker in two months.

GEC, no relation to the similarly named US electronics group, has been shopping for leading edge communications equipment makers since the $7.8bn sell-off of its defense electronics business to British Aerospace. It has since recovered full control of GPT, a PBX and public exchange switch supplier to British Telecom, from Siemens, and laid out $2.1bn for Reltec, a US developer of last- mile, local-loop systems. The latter was GEC’s first major foray in to the US domestic telecoms equipment market, but the Fore deal catapults the UK company into the global market for next generation public network and private WAN infrastructure systems

We had a pot of cash to spend on acquisitions after the Marconi de-merger to move us up into the same league as Cisco, Nortel and Lucent. Fore Systems sees 70% of all internet traffic pass through one of its switches at some point, so it looked like a safe bet, said a GEC spokesman.

Fore is a pioneer of high-bandwidth ATM, and brings with it an established customer base featuring leading telcos, internet service providers and private network users from around the world. Unlike some other second-tier equipment manufacturers currently being devoured by GEC rivals such as Alcatel, Ericsson and Nokia, Fore is also enjoying substantial revenue growth, with 1999 revenue up 35.3% at $632.4m. Profit before unusual charges was $50.2m, but a $199.3m charge related to Fore’s acquisition last September of Berkeley Networks contributed to a $207.3m loss for the year.

The acquisition is seen as broadly positive for GEC, adding new technology and greater international reach. GEC has been looking for a stronger position in the datacoms market and this gets them in, said John Matthews, analyst with telecoms consultancy Ovum Ltd, London. It increases the group’s presence in the US which is crucial to gaining recognition in the market, he added.

However, much will depend on successfully GEC has now distanced itself from its earlier reputation as a smothering influence on acquired expertise. Initially, the company said Fore will continue to act as a separate division under its own name, with CEO and president Tom Gill retaining his position, while reporting directly to GEC chief executive, George Simpson.

In the longer term, Fore is likely to be folded further into GEC Marconi Communications, where its level 3 ATM and IP infrastructure products will become integrated with GEC Marconi’s more traditional public network switch and management system products. รก