The strength of GEC’s cash position is underlined by the fact that the company will have to invest only UKP90m to UKP120m – $150m to $200m – in the proposed joint venture that will combine GEC’s Picker 1981 acquisition from RCA Corp with Philips NV’s medical electronics interests in order to justify a 50% shareholding in what will be a $2,000m-a-year business. This year’s interest on the legendary cash mountain should cover GEC’s cost without the need to dip into capital. Agreement on the venture was announced by Philips Friday, and it will result in what the Financial Times believes will be the bigest firm in the field, outranking even US giant General Electric’s $1,750m a year. The attraction of the match to the partners is that Picker, with UKP22.2m operating profits, does most of its $612m annual business in the US while Philips’ profitable $1,370m annual sales are mainly made in Europe.
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