GE acquisition of MDS could refuel growth here

Andrea Deckert//January 12, 2007//

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The acquisition of Rochester-based Microwave Data Systems Inc. by a unit of General Electric Corp. could lead to expanded local operations, officials said this week.
David Rodriguez, MDS chief financial officer and a member of the management team, said the ownership change should result in few changes locally, other than growth. The company expects more business-once it is part of GE-which could lead to more employees. MDS employs some 275 workers, the majority in Rochester.
The firm designs and manufactures networked high-speed microwave radios for wireless communications in applications including oil and gas, utility, traffic monitoring, public safety, lottery and other industrial areas. MDS ranked 33rd in the most recent list of manufacturers in the Rochester Business Journal.
The deal came to fruition quickly. GE approached the company roughly three months ago with an interest in acquiring MDS, Rodriguez said.
California-based Moseley Associates Inc. late last Friday announced the sale of MDS, its subsidiary since 2000, to GE’s Consumer & Industrial Division for an undisclosed sum.
GE Consumer & Industrial Division is a $14 billion global business with 60,000 employees in more than 100 locations. Officials there said the acquisition introduces complementary technology to GE’s Multilin business line.
Local analysts believe the change will be positive for MDS.
“It appears GE sees (MDS’) technology and business as a good add-on to what they do,” said Dennis Lohouse, principal at Bryce Capital Management LLC.
In addition to having the GE name as part of its moniker, MDS will gain access to things such as substantial amounts of capital and marketing expertise.
“If they leave the staff here in place, which I would think they would do, this could lead to much bigger things for the local operation,” Lohouse said.
Joseph Ryan, research director of Brighton Securities Corp., said it is likely GE believes MDS has long-term potential. GE is the type of company that is so far ahead of the business curve than most and tends to look more toward the future, similar to how Corning Inc. has been in terms of its research and development efforts.
“They are so focused on the future, that’s their nature,” Ryan said of GE. “With that said, I can’t say for sure what will happen in the future, but it appears GE likes what (MDS) is doing and are viewing it as an excellent, long-term investment.”
Ryan, who owns GE stock, said the company does not spend its money foolishly and would have given the acquisition a thorough review.
“This news is a real nice boost for the area,” Ryan said.
Based in Markham, Conn., Multilin employs 850 employees worldwide and offers a product line that helps automate electricity delivery systems.
The MDS technology will provide wireless options for customers when combined with Multilin’s current product lines in protection, metering, and control and automation systems, officials said.
The two companies will come together to compete in the $1.3 billion global industrial wireless market, which is expected to grow 15 percent this year.
Larry Sollecito, general manager of GE Multilin, said MDS’ technological and innovative ventures, along with plans for new products, attracted the firm.
Deborah Wexler, manager of global communications for GE’s Consumer and Industrial division, added there were several reasons GE was attracted to MDS.
“This is a business that GE Multilin has been aware of and impressed by for some time as we have worked in adjacent businesses, markets and technologies,” Wexler said. “We see incredible potential for us to grow together.”
The transaction is expected to close by the end of this month. Once completed, the new business will be a wholly owned GE subsidiary called GE MDS LLC.
The new venture will be run by Roberto Vengoechea, general manager of Multilin’s Instrument Transformer business. He will relocate to Rochester and work with Rodriguez and other current MDS management, including Richard Nozel, John Geiger and Michael Wagner.
Rodriguez declined to disclose revenues for the privately held firm but said sales have more than doubled over the last six years.
Since 1985, MDS has installed more than 500,000 radios in more than 110 countries. The radios are best known for their wireless and industrial performance, offering reliability in rugged conditions. The radios also provide long-range high-performance, which means less downtime and fewer radios required for customers’ networks.
MDS originally was part of Silicon Valley-based California Microwave Inc., which changed its name to Adaptive Broadband Corp. in April 1999 as part of a reorganization. Then in July 2000, Moseley bought MDS from Adaptive Broadband for $42 million.
MDS expanded its local operations last year, building a $2.6 million, 25,000-square-foot building across from its 30,000-square-foot facility. At the time, the firm added 50 employees. MDS has additional offices in Houston, Dallas, Orlando, Las Vegas, Salt Lake City, England, Australia, Canada and Latin America.
“(The acquisition) is a good thing for Rochester when a company with GE’s stature sets up a local presence,” Rodriguez said.
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