GE buying 80% stake in Kidder, Peabody

NEW YORK (AP) General Electric Co. will buy an 80 percent stakein Kidder, Peabody & Co. Inc., one of Wall Street's oldest and mostclosely held investment firms, both companies said yesterday.

General Electric Financial Services Inc., a unit of the giantmanufacturing, services and technology company, will pay cash underthe transaction agreement, but the exact price was not disclosed.

The remaining 20 percent stake will be retained by KidderPeabody's present shareholders and the existing partnership structureof the investment firm will remain intact, both companies said in apress announcement.

"We believe that we have created a powerful business combinationthat optimally matches people and capital," said Robert C. Wright,president and chief executive officer of GEFS, and Ralph D. DeNunzio,president and chief executive officer of Kidder Peabody, in theannouncement.

Both companies had declined comment Thursday on press reports ofan impending merger announcement, which said GE would pay about $600million for an 80 percent share of Kidder Peabody.

Founded in 1865, Kidder Peabody is one of the oldest privatelyheld investment houses on Wall Street. While it trails severalrivals in underwriting corporate securities, it is considered one ofthe top advisers on mergers and acquisitions.

The firm's net income has grown at an annual rate of 19 percent,the press announcement said, and at the end of its last fiscal yearending Nov. 30, 1985, its net income totaled $47 million, a 74percent increase over the previous year. It earned $43 million inthe first four months of fiscal 1986.

For GE, the acquisition extends its effort to concentrate moreon services and technology and less on basic manufacturing.

That effort includes GE's pending $6.28 billion acquisition ofRCA Corp., the parent of National Broadcasting Co.

After the RCA deal is closed later this year, GE expectsmanufacturing to account for only 20 percent of its annual earnings,compared with 50 percent in 1980. GE earned $2.34 billion in 1985 onrevenue of $28.3 billion.