GE Sells Off EDI Division

Could go public in 3-5 years

• By Chris McConnell
• 06/25/2002

One of the largest Electronic Data Interchange (EDI) providers changed hands yesterday in a $800 million transaction. General Electric Co. sold its Global eXchange Services (GXS) division to Francisco Partners, a Silicon Valley buyout group.

GXS provides a variety of transaction processing services to large enterprises and their partners, including its market-leading EDI services. It began as a mainframe time-sharing service and branched out into other computer services for large companies.

Although GE is a highly diversified company whose products range from consumer appliances to financial services to military hardware, it has begun to divest itself of businesses that range outside of its core competencies. GXS, as a computer service provider, was one such business.

EDI remains the standard for application-to-application transactions between enterprises and their suppliers, but it has been threatened lately by emerging technologies arising out of the online world, including XML and Web services. One motivation behind the division’s sale is to expand GXS’ reach into the computer industry.

GE spokesman David Frail told The New York Times, “Global eXange can be taken to the next level a lot better by a company that focuses on Internet technologies.” With the support and capital of Internet concern GXS can better compete with emerging e-commerce players.

According to a The New York Times article, GXS may roost with Francisco partners for three to five years, then go public.