UPDATE 3-GE could spend up to $30 bln on M&A-exec

* M&A compatible with dividend increases, buybacks -Rice

* ‘Not going to chase bad deals’ -Rice

* Shares up nearly 4 pct amid broad rally in U.S. stocks (Read more about the stock market today. )
(Adds investor comment, background)

By Scott Malone

BOSTON, Sept 1 (BestGrowthStock) – General Electric Co (GE.N: ) could
spend up to $30 billion on takeovers over the next two to three
years, a top executive said, in a sign the conglomerate is
coming out of its recessionary defensive crouch.

But John Rice, one of four vice chairman of the largest
U.S. conglomerate, cautioned that the number he described as
“$30 billion-ish” is not a commitment to spending. It would be
compatible, he said, with GE’s plans to boost its dividend and
buy back more shares, including the preferred stake it sold to
Warren Buffett’s Berkshire Hathaway Inc (BRKa.N: ) in October
2008 during the credit crisis.

“That doesn’t mean that we’ll spend that money; it doesn’t
mean that we won’t do more with the dividend or with the
buyback,” Rice, who heads the company’s technology
infrastructure unit, told an investor conference in New York.

“If we were to conclude that there aren’t the deals out
there that make sense, we might do less than that. We’re not
going to chase bad deals just so that we can say we spent ‘X’
billion on M&A,” he said.

The statement, which surprised some investors, was the
latest sign that mergers are coming back in a big way in
corporate America, after a few years when companies were more
concerned about conserving their cash.

‘SEA CHANGE’

GE has been more of a seller than a buyer of late. It is in
the process of selling a majority stake in its NBC Universal
media business to No. 1 U.S. cable operator Comcast Corp
(CMCSA.O: ), and has also recently signed deals to sell its
security unit to United Technologies Corp (UTX.N: ) and its
BAC-Credomatic Central American banking group to Colombia’s
Grupo Aval (GAA.CN: ).

Rice’s words could signal a change in direction.

“That is kind of a sea change from what they’ve been
talking about, because most of the things have been (joint
ventures), where they’re leveraging it with others and they’re
really conserving capital,” said Peter Sorrentino, senior vice
president and portfolio manager at Huntington Asset Advisors in
Cincinnati.

“One of the issues up until just the past couple of
quarters has been the talk about was there going to be enough
liquidity, was there going to be enough capital left over for
investment given that they were winding down or right-sizing GE
Capital, were they stealing capital from the other businesses
to be able to sustain that business?”

GE spent much of the past few years jealously guarding its
cash as it rode out a brutal downturn that shook its hefty
finance arm. But things have changed since the company broke a
nine-quarter streak of profit declines in the second quarter.

The world’s largest maker of jet engines and electric
turbines said in July that it would raise its dividend — which
it had slashed during the recession — by 20 percent starting
in the third quarter, a move that came earlier than Wall Street
had expected.

GE also said it would resume buying back its shares, a
practice it had suspended in September 2008. The board has
authorized a buyback of up to $11.6 billion of shares.

RESURGENCE IN M&A

Global takeover activity has spiked upward in recent weeks,
with last month going down as the busiest month for
acquisitions in at least four years.

Just this week blue-chip manufacturer 3M Co (MMM.N: ) agreed
to pay $943 million for Cogent Inc (COGT.O: ), a maker of
identification systems used to screen travelers at border
crossings, and $230 million for Israel’s Attenti Holdings SA,
which makes systems used to monitor criminals and elder care
patients.

Also on Wednesday, the head of United Technologies said the
world’s biggest maker of elevators and air conditioners is
interested in stepping up its pace of acquisitions, though it
is having a hard time agreeing on prices with potential
targets. [ID:nN01113266]

“We’ve got a nice pipeline of M&A still, but I would say
there’s a substantial disconnect between sellers’ expectations
and me as a buyer,” Chief Executive Louis Chenevert said.

GE shares were up 3.8 percent at $15.03 in midday trading
on the New York Stock Exchange, amid a broad rally in U.S.
shares driven by investor relief after a report showed that the
manufacturing sector grew faster than investors expected in
August. [ID:nN01115648]
(Reporting by Scott Malone; Editing by Gerald E. McCormick,
Matthew Lewis and Steve Orlofsky)

UPDATE 3-GE could spend up to $30 bln on M&A-exec